Qualified Adoption Expenses (QAE)

Written By
Paul Tracy
Updated August 5, 2020

What are Qualified Adoption Expenses (QAE)?

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 Do Qualified Adoption Expenses (QAE) Work?

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 Do Qualified Adoption Expenses (QAE) Matter?

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.