Qualified Adoption Expenses - QAE

AAA

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.

INVESTOPEDIA EXPLAINS '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. Child Tax Credit

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

    A tax credit in the United States which benefits certain taxpayers ...
  4. Education IRA

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

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

    Certain types or amounts of income not subject to federal income ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
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. Economics

    What's a Stock Keeping Unit (SKU)?

    A SKU, or bar code, is a unique identification code that retail and wholesale sellers use to track their inventory of products and services.
  7. Personal Finance

    Hiring a Nanny? 20 Questions to Ask First

    How to find a caregiver who'll fit into your family – and which questions you can't ask.
  8. Retirement

    What is Cohousing and How Does it Work?

    Originally a Danish concept from the 1960s, modern cohousing communities can be found in the U.S., England and China. But how exactly do they work?
  9. Personal Finance

    Six Agencies to Find a Caregiver for Your Child

    Hiring a caregiver for your kids can be tough. Here's a cheat sheet on how and where to find your personal Mary Poppins.
  10. Professionals

    Top Family-Friendly Companies to Work For

    Today's workplace is tough on women and families. One of the most important steps to changing that is paternity leave. A few companies are leading the pack

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!