What can an employer exclude from an adoptive parents gross income?
The employer can exclude reimbursements for qualified adoption expenses and reasonable and necessary expenses directly related to a legal adoption. There are two limitations on the amount of any excludable reimbursement — a dollar cap and an income limitation. (These are described in the next two questions.) In addition, for adoption assistance benefits to be excludable, the benefits must meet the Section 137 plan qualification requirements and IRS nondiscrimination requirements.
