Final answer:
Taxpayers can claim an adoption credit for expenses from a failed domestic adoption in the following tax year, but not for a failed foreign adoption or special-needs adoption unless it becomes final.
Step-by-step explanation:
Taxpayers can claim an adoption credit for the expenses of a failed domestic adoption. This credit is not available for the expenses of a failed foreign adoption.According to the Internal Revenue Service (IRS), taxpayers who have attempted to adopt a child and incurred qualifying adoption expenses, but the adoption did not become final, may still be eligible for the adoption credit. This form of tax credit can be claimed in the tax year after the expenses are paid or incurred for a domestic failed adoption.
However, in a successful adoption scenario, the credit is claimed in the year when it becomes final. In other words, a taxpayer cannot claim an adoption credit for expenses from a failed adoption in the case of a domestic or foreign adoption unless the adoption meets the criteria of a special-needs adoption.For a domestic failed adoption, a taxpayer can claim the credit for qualified adoption expenses such as adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging while away from home), and other expenses that are directly related to the legal adoption of a child.