Adopting a child can be expensive. To help families with the cost, the Canada Revenue Agency allows you to report eligible adoption expenses and claim a non-refundable tax credit. However, only certain expenses incurred during certain time periods qualify.
The Adoption Period
In order to claim adoption expenses on your income tax return, they must occur during the adoption period. The CRA defines the beginning of the adoption period as the day you submit your application with an adoption agency or a Canadian court. The period ends on either the day the child begins to live with you permanently or the day the adoption is finalized.
For example, if the child is living with you full time but the adoption is not legally finalized until 8 months after that time, the last day of the adoption period is the date of finalization rather than the date your child begins living with you.
Eligible Adoption Expenses
The CRA allows you to claim most of the reasonable and mandatory expenses you incur as part of the adoption process. For example, you can deduct agency fees from registered provincial or territorial adoption agencies. If you have to travel for the purpose of your adoption, you may claim the cost of travel, reasonable meal expenses on your journey and accommodation fees.
You may also claim court costs, legal fees and administrative fees, as well as any adoption expenses required by your province or territory.
If you adopt a child from outside of the country, you may deduct mandatory agency fees, travel costs and immigration fees.
Any expenses that do not fall into these categories are not deductible. For example, you can only claim reasonable and direct travel costs. If you add a few days to your journey or take an indirect route, you cannot claim these costs as eligible adoption expenses.
Limits on Expenses
As of 2020, the CRA has a $16,563 limit on the amount of adoption expenses you can claim. However, this amount is per child, and you can claim $30,000 if you adopt twins or more if you adopt several children.
It’s important to note that unless you have adopted multiple children, both adoptive parents may only claim $16,563 total. You can split the claim in any way on your income tax returns, but the total must not exceed $16,563.
Filing Your Income Tax Return
To claim this deduction, add up all of your eligible expenses and input the total on line 31300 of your income tax return.
Remember it is a non-refundable tax credit. While it can offset your tax owed, it alone cannot qualify you for a refund. As a result of this, you may want to apply the adoption expenses to the adoptive parent with the higher income.
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