41-154: IA 177 Adoption Tax Credit 41-154 (2024)

Who files this form

Complete IA 177 to claim the Iowa Adoption Tax Credit. The adoption must be finalized, and the child must be permanently placed in Iowa by an adoption service provider or an agency meeting the requirements of the Interstate Compact on the Placement of Children.

• Use a separate IA 177 for each adopted child.
• If you and your spouse adopted the child together and file jointly, complete one IA 177. Only one credit may be claimed between you.
• If you and your spouse file separately, each spouse must complete an IA 177 and divide the credit.
• If you and another adoptive parent each paid qualified expenses for the same child, each must complete an IA 177. You may divide expenses as agreed between you.

What you'll need

You must include the completed IA 177 and IA 148 Tax Credits Schedule with your IA 1040.

To complete IA 177, have these details available:

• Your name and Social Security Number (SSN).
• The child’s full name, identifying number if available, age at adoption, Iowa placement information, and the year the adoption became final.
• The other adoptive parent’s name and SSN, if not reported on the IA 1040. You may leave the SSN blank if you cannot obtain it.
• Adoption expenses paid or incurred and amounts reimbursed by an employer or other entity.
• Iowa Adoption Tax Credits previously claimed by you for this child, and credits claimed by other taxpayers for the same child in this or other tax years.

How to file

Complete Part I with the child’s information, then calculate the credit in Part II.

• If the adoption became final in 2024, line 9 includes adoption expenses paid or incurred before or during 2024. If it became final before 2024, include only expenses paid or incurred during 2024.
• Subtract reimbursements to find qualified expenses. Account for credits already claimed for this child by you and other taxpayers. Line 15 cannot be less than zero.
• Enter the smaller of line 11 or line 15 on line 16.
• Report line 16 in column K of Part II on the 2024 IA 148 Tax Credits Schedule. Use tax credit code 66 in column I and leave column J blank.
• If you completed multiple IA 177 forms, report each credit separately on IA 148.

Include IA 177 and IA 148 with your IA 1040.

Common mistakes

• Claiming before the adoption is final. You cannot claim expenses for an adoption that has not become final.
• Claiming for a child not placed in Iowa. The form tells you to stop because you are not eligible.
• Listing multiple children on one form. Include only one adopted child per IA 177.
• Including another parent’s share of expenses. When filing separate claims, include only your share on line 9.
• Amending an earlier return for pre-finalization expenses. You may not amend a return for a year before the adoption became final to claim those expenses.
• Leaving out required forms. Complete IA 148 and include both IA 177 and IA 148 with your IA 1040.

Questions people ask

What expenses qualify?

Qualified adoption expenses are unreimbursed expenses connected with adopting a child. They include the biological mother’s medical and hospital expenses incident to the child’s birth, welfare agency fees, legal fees, and other adoption-related fees and costs.

How much is the credit?

The credit equals the smaller of $5,000 or qualified adoption expenses. The calculation reduces the available $5,000 by Iowa Adoption Tax Credits already claimed for the same child by you and other taxpayers.

What if the child does not have an identifying number?

Line 2 accepts an SSN, adoption taxpayer identification number, or individual taxpayer identification number. Leave it blank if no number is available.

What if the credit is more than my tax liability?

Any credit exceeding your tax liability can be refunded or credited to your tax liability for the following year.

Official sources

• https://revenue.iowa.gov/media/4127/download?inline