If you adopted or tried to adopt a child in 2014, you may qualify for a tax credit. If your employer helped pay for the costs of an adoption, you may be able to exclude some of your income from tax. Here are ten things you should know about adoption tax benefits.

1. Credit or Exclusion.  The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.

2. Maximum Benefit.  The maximum adoption tax credit and exclusion for 2014 is $13,190 per child.

3. Credit Carryover.  If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2014, you can use it to reduce your taxes for 2015. You can do this for up to five years, or until you fully use the credit, whichever comes first.

4. Eligible Child.  An eligible child is under age 18. This rule does not apply to persons who are physically or mentally unable to care for themselves.

5. Qualified Expenses.  Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.

6. Domestic or Foreign Adoptions.  In most cases, you can claim the credit whether the adoption is domestic or foreign. However, the timing rules for which expenses to include differ between the two types of adoption.

7. Special Needs Child.  If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn't pay any qualified adoption expenses.

8. No Double Benefit.  Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you can’t claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.

9. Income Limits.  The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on the amount of your income.

Did you change your name last year?  Did your dependent have a name change?  If the answer to either question is yes, be sure to notify the Social Security Administration before you file your tax return with the IRS.

This is important because the name on your tax return must match SSA records.  If they don’t, you’re likely to get a letter from the IRS about the mismatch.  And if you expect a refund, this may delay when you’ll get it.

Be sure to contact SSA if:

• You got married or divorced and you changed your name.
• A dependent you claim had a name change. For example, this would apply if you adopted a child and that child’s last name changed.

File Form SS-5, Application for a Social Security Card, with the SSA to let them know about a name change.  You can get the form on SSA.gov by calling 800-772-1213 or at an SSA office.

You can file Form SS-5 at an SSA office or by mail.  Your new card will have the same SSN as before but will show your new name.

If you have an adopted child who does not have a SSN, use a temporary Adoption Taxpayer Identification Number on your tax form.  You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS.  Get the form on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Adoption can create new families or expand existing ones.  The expenses of adopting a child may also lower your federal tax. If you recently adopted or attempted to adopt a child, you may be eligible for a tax credit.  You may also be eligible to exclude some of your income from tax. Here are ten things the IRS wants you to know about adoption tax benefits.

1.  The maximum adoption tax credit and exclusion for 2012 is $12,650 per eligible child.

2.  To be eligible, a child must generally be under 18 years old.  There is an exception to this rule for children who are physically or mentally unable to care for themselves. 

3.  For 2012, the tax credit is nonrefundable.  This means that, while the credit may reduce your tax to zero, you cannot receive any additional amount in the form of a refund.

4.  If your credit exceeds your tax, you may be able to carry forward the unused credit.  This means that if you have an unused credit amount in 2012, you can use it to reduce your taxes for 2013.  You can carryover an unused credit for up to five years or until you fully use the credit, whichever comes first.   

5.  Use Form 8839, Qualified Adoption Expenses, to claim the adoption credit and exclusion.  Although you cannot file your tax return with Form 8839 electronically, the IRS encourages you to use e-file software to prepare your return.  E-file makes tax preparation easier and accurate.  You can then print and mail your paper federal tax return to the IRS.

6.  Adoption expenses must directly relate to the legal adoption of the child and they must be reasonable and necessary. Expenses that qualify include adoption fees, court costs, attorney fees and travel costs.

7.  If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies.  You may be able to take the tax credit even if you did not pay any qualified adoption expenses.  See the instructions for Form 8839 for more information about this rule.

8.  If your employer has a written qualified adoption assistance program, you may be eligible to exclude some of your income from tax.

9.  Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion.  However, you cannot claim both a credit and exclusion for the same expenses.  This rule prevents you from claiming both tax benefits for the same expense.

10.  The credit and exclusion are subject to income limitations.  The limits may reduce or eliminate the amount you can claim depending on your income.