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. Earned Income Credit - EIC

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

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

    A federal tax credit that may be claimed by federal taxpayers ...
  4. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  5. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  6. Exemption

    A deduction allowed by law to reduce the amount of income that ...
Related Articles
  1. Raising Grandchildren A Financial Feat
    Retirement

    Raising Grandchildren A Financial Feat

  2. Saver's Tax Credit: A Retirement Savings ...
    Savings

    Saver's Tax Credit: A Retirement Savings ...

  3. Opening Your Child's First Bank Account
    Personal Finance

    Opening Your Child's First Bank Account

  4. Give Your Taxes Some Credit
    Taxes

    Give Your Taxes Some Credit

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center