Adopting a baby or older child brings da lot of joy into a family, but that joy will not cover the financial cost of adoption. The government has tax credits for families that adopt children. The current adoption tax credit can be applied to any federal taxes a family owes and the remaining amount is then given as a refund. In the coming years there will be changes to the tax credit that will stop the balance of the adoption tax credits from being given as a refund to adoptive families.
SmartMoney.com has a detailed article on the tax-credit for adoptive parents. It provides information on the changing rules that will affect how families can apply the tax credit to there federal income tax return