Post-DOMA: Second Parent Adoption Tax Credit Updates for Same-Sex Unmarried Parents

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By Melissa B. Brisman, Esq

In most cases, if a same-sex couple is not married, a federal income tax credit is likely to cover many of the costs associated with the second parent adoption. Subject to limitations and exclusions, taxpayers who adopt a child may be entitled to a tax credit in the year an adoption is finalized. Taxpayers can usually only deduct “qualified adoption expenses.” According to the tax legislation, the term “qualified adoption expenses” means reasonable and necessary adoption fees, court costs, attorney’s fees, and other expenses, which are:

  1. Directly related to the legal adoption of an eligible child by the taxpayer;
  2. Not incurred in violation of State or Federal law, or in carrying out any surrogate parenting arrangement.
  3. Not for the adoption of a child of an individual’s spouse; and
  4. Not reimbursed under an employee program or otherwise.

How the benefit works for unmarried couples

The adopting (non-biological) partner in an unmarried same-sex union will be entitled to the adoption tax credit benefit even when he or she adopts his or her partner’s child. The adoption tax credit must be taken in the tax year the adoption is finalized.
The credit is no longer refundable per a change in the 2013 tax law and the tax credit has been made a permanent part of the federal tax law. If you paid no federal taxes or owe no federal taxes, you cannot receive a refund; however you can carry the balance of your credit forward for an additional five tax years.

For 2018 tax year, the maximum credit is $13,840. Adoptive Parent, your adjusted gross income should be less than $207,580 to earn the full credit. Between $207,580 and $247,580 the credit amount will be reduced and over $247,580, no tax credit is available.

Note that the law specifies that the adoption credit is not available in a surrogate parenting arrangement – which means the credit is not available to the child’s biological parent. However, it is likely that the non-biological parent can utilize the credit in doing a second-parent adoption since that adoption is not in connection with a surrogate parenting arrangement (presumably the surrogate’s rights have already been terminated). Taxpayers utilizing the credit in this situation should confer with their tax advisor. Indeed taxpayers should note that each person’s tax return is unique and this information is intended as a summary of the federal adoption tax credit. Readers should not rely on this summary for individual tax or legal advice, as none is being given, and should consult their own individual tax accountant or lawyer to be certain they follow all federal tax requirements.

About the Author: Melissa B. Brisman is an attorney who practices exclusively in the field of reproductive law and is considered by her peers to be a leader in her profession. Ms. Brisman’s experience and qualifications are unparalleled. She employs an experienced and qualified staff of legal and administrative professionals and is licensed to practice law in Massachusetts, New Jersey, New York and Pennsylvania. Ms. Brisman has a practice, Melissa B. Brisman, Esq., LLC, located in Montvale, New Jersey, offering a full range of legal services in connection with gestational carrier arrangements, ovum, sperm, and embryo donation, and adoption. In addition, Ms. Brisman is sole owner of Reproductive Possibilities, LLC, an agency that facilitates gestational carrier arrangements, and Surrogate Fund Management, LLC, a company that manages escrow in connection with reproductive arrangements. Surrogate Fund Management, LLC, a company that manages escrow in connection with reproductive arrangements.