I am a tax professional and see questions about the adoption tax credit all the time.
The $10,000 max became effective on 1/1/02--so this is the first year's tax return that you can claim this amount. HOWEVER, in an international adoption, you can only start taking the credit in the year that your adoption was finalized. Save your receipts and use them for your credit in the year your adoption was finalized. Expenses incurred prior to 2002 are subject to the previous cap which is $5000. You can not take more than your tax obligation minus any other credits you are taking (i.e. education, child tax, child care, etc.) The remainder (up to the cap) can be taken over five years to reduce your tax obligation. Also, if your employer reimburses you for a portion of your adoption expenses you must deduct this amount from your total expenses before you apply the credit.
I hope this helps! If you would like written clarification, please email me at
mandalaadmin@earthlink.net and I'll be happy to send you the actual written information. Leah