The Ins and Outs of Financing Adoption

Tax Credits

There is a federal adoption tax credit of $5,000 per child, whether the adoption is domestic or international. Parents adopting a U.S. child with special needs qualify for a $6,000 tax credit. The tax credit for intercountry adoptions and for domestic non-special-needs adoptions will expire in 2002.

At the Web site of the Internal Revenue Service, you will find information about tax rules and changes to those rules. You can also look to the IRS Web site for information about the IRS Adoption Taxpayer Identification Number, and for "Publication 968" on the Adoption Tax Credit and Tax Exclusion.

Additionally, several states have approved state tax credits for families adopting children from the public child welfare system. For more information, please contact your state's Department of Taxation or Revenue or your State Adoption Specialist.

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