Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Qualified Adoption Expenses (QAE)

What it is:

Qualified adoption expenses (QAEs) are costs associated with adopting a child. They are generally tax-deductible and may even qualify for a tax credit.

How it works (Example):

For example, let's assume that Jane would like to adopt a child. The adoption agency has indicated that the adoption will cost $30,000. The IRS allows Jane to take a $13,170 tax credit to help offset qualified adoption expenses. The costs can include attorney fees, court costs, and travel expenses.

Why it Matters:

Adoption is expensive, and in order to facilitate more of them, the IRS allows parents to recoup some of the costs. However, the costs of adoption vary considerably: parents who adopt special-needs children, for example, receive a full adoption tax credit even if the adoption costs are less than the amount of the tax credit. Additionally, the credit phases out for parents with high incomes.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...