Special Needs Adoption Tax Credit (ATC)
Provides a credit to assist in the nonrecurring adoption expenses for a special needs child that is a resident or ward of a resident of the state of Missouri.
- Any person residing in this state that legally adopts a special needs child who is a resident or ward of a resident of this state at the time the adoption is initiated is eligible to receive a tax credit up to $10,000 for nonrecurring adoption expenses for each child.
- Any business entity providing funds to an employee to legally adopt a special needs child who is a resident or ward of a resident of this state at the time the adoption is initiated may be eligible to receive a credit of up to $10,000 for nonrecurring adoption expenses for each child.
The child must be a special needs child who is a resident or ward of a resident of this state at the time the adoption is initiated as determined by the Department of Social Services, Children's Division, a child-placing agency licensed by the state, or by a court of competent jurisdiction.
How the Program Works
- To claim the Adoption Tax Credit, the parent, or their employer if the employer is claiming the full credit, must complete Form MO-ATC.
- The claimant must attach a copy of the completed Form MO-ATC along with the tax return the first year the credit is being claimed.
- Up to 50 percent of any tax credit earned for a resident adoption may be claimed upon placement of the child and the remaining 50 percent claimed after the special needs adoption is final.
Eligible Use of Tax Credit
During the year of the adoption, or any year to which the credit is carried forward, the credit will be reduced by the state's cost of providing care, treatment, maintenance, and services when the child is placed, with no intent to return to the adoptive home, in foster care or residential treatment licensed or operated by the Department of Social Services, Children's Division, the Division of Youth Services, or the Department of Mental Health, or when a juvenile court temporarily or finally relieves the adoptive parents of custody of the child.
Carry Forward Provisions
Any amount of tax credit which exceeds the tax due may be carried forward to the next four subsequent years, not to exceed a total of five years.
- This tax credit may be applied to adopting parents' or the qualifying business' state income tax, corporation income tax, fiduciary tax, franchise tax, or any other tax incurred under the provisions of Chapter 143, RSMo excluding state withholding tax.
- This credit may be assigned, sold, or transferred. When first claiming the credit as the result of a sale or assignment, attach a statement signed by the seller including the names, addresses, phone numbers, and social security numbers of the buyer and seller, the date the credit was sold, and a copy of the original Form MO-ATC completed by the adoptive parents.
The total dollars available for the Adoption Tax Credit is two million dollars. The tax credit is only allocated for the adoption of special needs children who are residents or wards of residents of this state at the time the adoption is initiated. The cumulative amount of tax credits that may be claimed by taxpayers claiming the credit for nonrecurring adoption expenses can be no more than two million dollars.
To claim the Adoption Tax Credit a claim must be filed between July 1 and April 15 of each fiscal year.
- Form MO-TC, Miscellaneous Tax Credits
- Form MO-ATC, Adoption Tax Credit (Revised)
- Individual Income Tax Forms
- Business Tax Forms
Contact Missouri Department of Revenue, Taxation Division:
- E-mail: [email protected]
- Phone: 573-526-8733 (for individual tax) 573-751-4541 (for business tax)