What is a Tax credit carryforward?
A tax credit carryforward allows taxpayers to apply unused nonrefundable credits to future tax years when current-year liability is insufficient to absorb the full benefit. Under the One Big Beautiful Bill Act, adoption credit carryforwards are available for 5 years from the original claim year, ensuring families eventually capture their full benefit. Strategic income planning through Traditional 401k contributions can accelerate carry-forward utilization by managing tax liability across years.
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