For the year in which an order of adoption is entered, the taxpayer may claim a credit for 50% of the cost of adopting a child who is a citizen or legal resident of the United States and who was in the custody of a California public agency or a California political subdivision. Include the following costs if directly related to the adoption process:

Qualifying costs that were paid or incurred in any year prior to the year in which the order of adoption is entered may be included in determining the credit for the year the credit is allowed.

This credit does not apply when a child is adopted from another country or another state or was not in the custody of a California public agency or a California political subdivision.

Note: Any deduction for the expenses used to claim this credit must be reduced by the amount of the child adoption costs credit claimed. Use the worksheet to figure this credit. If more than one adoption qualifies for this credit, complete a separate worksheet for each adoption. The maximum credit is limited to $2,500 per minor child. California does not have a separate adoption credit form.

The allowable credit is limited for a tax year to $2,500 per minor child. The excess credit can be carried over to future years until the credit is used up.

See Chapter 1.13 for Federal and Adoption credit issues related to RDPs.