Special Needs Adoption Tax Credit (ATC)
- Provides a credit to assist in the nonrecurring adoption expenses for a special needs child.
- Any person residing in this state that legally adopts a special needs child 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 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 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.
- Effective January 1, 2000, up to 50 percent of any tax credits earned for adoptions finalized after January 1, 2000, 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
- The credit may be carried forward four subsequent years. During the year of adoption, or any year in 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.
- 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 Adoption Tax Credit (ATC) is $4 million. Initially $2 million is allocated for Missouri resident special needs children, and $2 million is for nonresident special needs children.
- If claims exceed the amount available for either category, the total amount available will be apportioned among all valid claims for that category based on the amount of ATC's claimed on each valid return filed regardless of the order received.
- If the Special Needs Adoption Credit is apportioned and a tax liability remains, an amended return may be filed. Amended returns may continue to be filed until the credit is satisfied up to the tax liability for a particular tax year or the return goes out of statute. Generally, a return goes out of statute three years from the due date of that year's return.
- The cumulative amount of tax credits that may be claimed by taxpayers claiming the credit for nonrecurring adoption expenses shall not be less than $4 million but may be increased by appropriation in any one fiscal year.
- Beginning July 1, 2006, applications to claim the ATC for children who were a Missouri resident when the adoption was initiated must be filed between July 1 and April 15 of each fiscal year. Also beginning July 1, 2006, applications to claim the ATC for children who were not Missouri residents when the adoption was initiated must be filed between July 1 and December 31 of each fiscal year. ATC refunds are issued during the month of June.
Contact Missouri Department of Revenue, Taxation Division:
- E-mail: firstname.lastname@example.org
- Phone: 573-526-8733 (for individual tax) 573-751-4541 (for business tax)