What is the adoption tax credit? Q.What is the adoption tax credit? A.The tax code provides an adoption credit of up to $14,300 for qualified adoption expenses in 2020. The credit is available for each child adopted, whether via public foster care, domestic private adoption, or international adoption. The total amount of adoption credits for 2018 is estimated to reach approximately $400 million. Read more about What is the adoption tax credit?
What is the difference between refundable and nonrefundable credits? Q.What is the difference between refundable and nonrefundable tax credits? A.Taxpayers subtract both refundable and nonrefundable credits from the taxes they owe. If a refundable credit exceeds the amount of taxes owed, the difference is paid as a refund. If a nonrefundable credit exceeds the amount of taxes owed, the excess is lost. Read more about What is the difference between refundable and nonrefundable credits?
How does the tax system subsidize child care expenses? Q.How does the tax system subsidize child care expenses? A.Working parents are eligible for two tax benefits to offset child care costs: the child and dependent care tax credit and the exclusion for employer-provided child care. Though the child and dependent care tax credit was temporarily expanded and made refundable for 2021, it benefits only a small share of parents because relatively few have formal child care expenses that qualify for the credit. Read more about How does the tax system subsidize child care expenses?
