Credit for Child Adoption Costs – Code 197

For the year in which an adoption decree or an order of adoption is entered (e.g., adoption is final), claim a credit for 50% of the cost of adopting a child who was both :

A citizen or legal resident of the United States.

In the custody of a California public agency or a California political subdivision.

Treat a prior unsuccessful attempt to adopt a child (even when the costs were incurred in a prior year) and a later successful adoption of a different child as one effort when computing the cost of adopting the child. Include the following costs if directly related to the adoption process:

Fees for Department of Social Services or a licensed adoption agency.

Medical expenses not reimbursed by insurance.

Travel expenses for the adoptive family.

Note :

This credit does not apply when a child is adopted from another country or another state, or was not in the custody of a California public agency or a California political subdivision.

Any deduction for the expenses used to claim this credit must be reduced by the amount of the child adoption costs credit claimed.

Use the worksheet below to figure this credit using whole dollars only . If more than one adoption qualifies for this credit, complete a separate worksheet for each adoption. The maximum credit allowable is limited to $2,500 per minor child. Carry over the excess credit to future years until the credit is used.

Enter qualifying costs for the child.

Credit percentage – 50%: .50

Credit amount. Multiply line 1 by line 2. Do not enter more than $2,500.