Qualified Adoption Expenses - QAE

DEFINITION of 'Qualified Adoption Expenses - QAE'

The necessary costs paid to adopt a child younger than 18 years of age or any disabled person who requires care. Qualified adoption expenses (QAE) are those that the Internal Revenue Service (IRS) defines as reasonable and necessary, including adoption fees, court costs, attorney fees, travel costs and other expenses directly related to the adoption. These fees can be used to claim an adoption credit or exclusion that reduces the adopting parents' taxable income.

BREAKING DOWN 'Qualified Adoption Expenses - QAE'

Eligible taxpayers use IRS form 8839 to provide the information required to claim the adoption credit on their federal tax returns. Taxpayers must provide the adopted child's first and last names, year of birth and identifying number. They must also note whether the child has special needs or was foreign born and attach the required adoption documents. The tax credit for QAE phases out for taxpayers whose modified adjusted gross incomes exceed a certain threshold. Taxpayers may not claim the adoption credit for any fees paid or reimbursed by an employer or government program. They also may not claim the credit when adopting a spouse's child.

RELATED TERMS
  1. Adoption Credit

    A federal tax credit that may be claimed by federal taxpayers ...
  2. Education IRA

    A savings plan for higher education. Parents and guardians are ...
  3. Exemption

    A deduction allowed by law to reduce the amount of income that ...
  4. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  5. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  6. Earned Income Credit - EIC

    A tax credit in the United States which benefits certain taxpayers ...
Related Articles
  1. Retirement

    Raising Grandchildren A Financial Feat

    Becoming a full-time caregiver again presents many challenges - including making ends meet.
  2. Savings

    Saver's Tax Credit: A Retirement Savings Incentive

    Here's another reason to put money toward your retirement nest egg.
  3. Personal Finance

    Opening Your Child's First Bank Account

    Teach your children to save up to meet their spending - and saving - goals.
  4. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. Budgeting

    Kids Or Cash: The Modern Marriage Dilemma

    It now costs nearly $300,000 to raise a child for 18 years. Are you sure you're up for it?
  6. Investing Basics

    What's an Electronic Communications Network?

    An electronic communications network connects buyers and sellers so they can directly trade stocks, currencies and other financial instruments.
  7. Investing News

    Stocks to Eye with China's One-Child Policy Ended (MJN, PG)

    Here are four stocks to consider in the wake of China ending its one-child policy.
  8. Budgeting

    6 Cost-Effective Tips for Raising Your First Child

    The excitement of welcoming your first child to your family shouldn't prevent you from making good cost-effective decisions.
  9. Insurance

    What Does It Cost To Raise a Child in America?

    Having a family can be an expensive proposition, but couples who know the numbers can strategize to lower the costs.
  10. Financial Advisors

    Top Financial Planning Issues for Older Parents

    Clients who have children later in life present an opportunity for advisors. Here are the key the financial planning issues that need to be addressed.
RELATED FAQS
  1. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  2. How do alimony and child support factor into my taxable income?

    The Internal Revenue Service, or IRS, applies a different tax treatment to alimony than child support. Most forms of alimony ... Read Full Answer >>
  3. What are some examples of common fringe benefits?

    The majority of employers in the private and public sectors offer their employees a variety of benefits in excess of stated ... Read Full Answer >>
  4. How can I start an IRA for my child?

    The Roth IRA is hands-down the most attractive retirement plan available for people with at least 15 or more years until ... Read Full Answer >>
  5. What options do I have to save for my child's education?

    There are numerous options available to invest savings for a child's education: State-sponsored "529" college savings plans: ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center