Adoption Tax Credit

This year adoptive parents may be able to take a tax credit of up to $10,160
for qualifying expenses paid to adopt an eligible child. Also, up to $10,160
paid or reimbursed by an employer for qualifying adoption expenses under an
adoption assistance program may be excludable from gross income. Adoptive
parents may claim both a credit and an exclusion for expenses of adopting an
eligible child.

Finally, beginning in 2003, the maximum credit and exclusion of $10,160,
subject to certain income and tax liability limits, will be allowed for the
adoption of a child with special needs even if the adoptive parents do not
have ANY qualifying expenses. This "refundable credit" has long been sought
by adoption advocates.

Read more at www.irs.gov/publications/p968/index.html