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.
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