Claiming Tax Credits for a New Baby or Adopted Child

Congratulations! A new child provides an opportunity to claim the Child Tax Credit.

Child Tax Credit (CTC)

The Child Tax Credit for 2025 is $2,200 per child with up to $1,700 per child potentially refundable. 

To qualify for the CTC, your child must…

• Be under 17 years old at the end of the tax year.
• Have lived with you over half of the tax year except for temporary absences, like vacations, schools, camp, etc.
• Not have provided more than half of their own financial support during the year.
• Be a U.S. citizen, U.S. national, or U.S. resident alien.
• Have a Social Security Number

Adopting parents can claim the CTC once the adoption is finalized and the child meets the qualifying requirements.

Can I claim any credits or deductions for my adopted child?

In addition to the CTC, adoptive parents can claim the Credit for Qualified Adoption Expenses,Form 8839, also known as the Adoption Credit, for all qualified adoption expenses paid. For the tax year, this nonrefundable credit is worth up to $17,280, $5,000 of which is refundable, and can be claimed for costs related to the adoption of an eligible child (under age 18 and not a spouse’s child). These expenses can include fees, court costs, legal fees, agency fees, travel expenses, and expenses required by the state as a condition of the adoption. Any unused portion of the refundable credit can be carried over for five years.  The carryover does not pertain to the refundable $5,000.

If the adopted child was born in the US or is a resident alien, you can claim the credit the year after you incurred the related expenses. But if the adoption is finalized the same year you began incurring related expenses, you can claim the Adoption Credit that year. If you incur adoption expenses in the year after the adoption is finalized, you can claim the credit for that year.

Can I claim the Adoption Credit even if the adoption is unsuccessful?

If an attempt to adopt a child within the United States is unsuccessful, you may still be able to claim the credit for certain qualified expenses. For failed domestic adoptions, you can generally claim the credit for qualified expenses, typically in the year following payment. For failed international adoptions, expenses usually do not qualify unless the adoption is finalized.

If you adopt a “special needs” child, such as a child from foster care, you may claim the full credit even if you did not spend any money for the adoption. A “special needs” child is not necessarily a child with medical issues; the term also covers family groups and others with special circumstances. State and local agencies determine who qualifies as a “special needs” child.

Can I claim the Earned Income Tax Credit (EITC) if I have, or adopted, a new child? 

A new child raises the amount of income you can earn and the amount of the EITC you may be eligible for. If you were previously ineligible for the EITC, having a child may allow you to claim it.

Can I claim a credit for daycare expenses?

If you’ve incurred childcare expenses, you can claim a portion of these by claiming the Child and Dependent Care Credit. The amount of expenses you can claim is based on the number of qualifying individuals who are receiving care. The allowable amount of expenses is up to $3,000 for one child and $6,000 for two or more children. If you are paying for care for two or more children, the $6,000 can be split in any way. For example, you have an 18-month-old and a 10-year old. You pay $8,000 a year for the 18-month old and $1,000 for the 10-year old, you can claim a credit on a total of $6,000 of the $9,000 you paid. This credit is even allowed when you have daycare expenses for older children (and other dependents) if the individual needs the care because they are unable to care for themselves. 

The credit is a percentage of the allowed expenses and is based on adjusted gross income (AGI), the maximum credit is 35% of the expenses and the lowest credit is 20% of the expenses. This credit has no maximum income limit so taxpayers with higher incomes can claim the credit.