Credit for Adoption Expenses

If you are entitled to claim an adoption tax credit on the federal income tax return, you may also claim a tax credit for these expenses on your North Carolina return. For tax year 2013, the tax credit is equal to 30% of the allowable tax credit claimed on your federal return. For tax years 2007 through 2012, the tax credit is equal to 50% of the allowable tax credit claimed on your federal return.

To determine the amount of your credit, you must complete the Adoption Tax Credit Worksheet on page 19 of the instructions. Enter your credit amount on line 22 of Form D-400TC. Your credit may not exceed your income tax liability for the year reduced by the sum of all other credits allowed. Any unused credit may be carried forward for the next succeeding five years.

A part-year resident or nonresident may claim a prorated credit based on the percentage of income that is subject to North Carolina tax.

Be sure to include your Form D-400TC (tax credit schedule) when filing your return.

For tax years beginning on or after January 1, 2014, this credit is no longer available.