The federal adoption expense income tax credit was increased in 2003. Adopting and adoptive parents are allowed a federal tax credit of up to $10,160 per child, whether the adoption is domestic or international. In domestic adoptions, parents can claim a credit based on qualifying expenses even if the adoption does not move through to finalization. Parents adopting a U.S. child with special needs can take the full credit without qualifying expenses. The tax credit is separate from, but must be coordinated with, any adoption benefits provided by employers. Stepparent adoptions are not included in the federal adoption tax credit.
Individual states also offer tax benefits to adopting and adoptive parents. Until recently, the cap on state credits was $2,000 per child; however, recent legislation has seen some states boost this amount considerably.
More information on Tax Benefits for Adopting & Adoptive Parents
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