The Adoption Tax Credit
Did you know there are tax benefits for adopting? This is a great way to help offset some of the fees and costs associated with the adoption process. Though there is a max income cap, the phase-out doesn’t begin until you make over $250,000 plus annually.
Under this tax benefit, a tax credit for qualified expenses related to adoption and paid to adopt for 2020 was $14,300. This is huge, especially as adopting a child is so very costly. The tax credit helps tremendously offset the high fees associated with the adoption process. Qualified adoption expenses include the following:
- Attorney fees
- Court costs
- Reasonable and necessary adoption fees set by the adoption agency
- Traveling expenses
(including meals and lodging) - Any other costs directly related to with the principal reason for adopting an eligible child
Adoption expenses that are paid before a child is identified in the process could still qualify. For example, parents pursue adoption, payout of pocket for a home study. This fee can still be treated as a qualified adoption expense very early on in the process.
One other thing to note about this particular tax credit and the year you can claim depends on a few things.
- When the adoption expenses were paid
- Whether the adoption is foreign or domestic
- When the adoption was finalized
Though depending on the type of adoption, rules for claiming the credit can vary. This credit does allow for domestic and foreign adoptions.
Loans
Just like there are home loans and car loans, there are adoption loans. There are a few different adoption loans available. A Child Waits Foundation offers grants up to $7,000 for either international or domestic adoptions and low-interest loans up to $10,000. Pathways For Little Feet is a Christian organization that provides interest-free adoption loans. They have helped place over 600 kids into loving homes.
Helpful tips for affording adoption
- Though few employers will advertise, some offer adoption assistance! Depending on the company, you can receive financial reimbursements for the adoption and paid leave to cover the time away during the adoption process. Connect with your company to get the most out of your benefits and dig deeper to find out about their adoption benefit offerings.
- Some adoption agencies offer a sliding fee scale. This means that based on your income, the fees are structured around your finances. While many agencies are flat rate in terms of their costs, look deeper into it and find out if there are any with sliding fee scales that could offer you a more affordable option for adopting.
- If you adopt a child with medical needs, take a look into your state’s subsidy programs. Children born in the United States with special needs can qualify for these programs. Kids who reside in foster care for a certain period of time may also be eligible for these benefits. Counties within each state may also offer varied benefits, so check with them directly to see if you qualify.
Fundraising
Fundraising! Adoption is EXPENSIVE; did we mention that? Gather your family, friends, co-workers, and neighbors and host a good old-fashioned fundraiser. While not everyone may be comfortable doing this, it is a great way to raise some funds. From bake sales to bingo nights, get creative.
Many parents choosing adoption receive financial gifts from family members. These monetary gifts or interest-free loans from relatives like parents, siblings, grandparents, aunts, and uncles can be used towards the adoption process at no additional cost. Your family can be a great support system both emotionally and financially through this special journey.
Adoption Deposits
Many adoption agencies will ask you to make a deposit on your placement fee, even before a child is placed with you. This fee can be difficult if your finances are a bit tight. It can be a struggle for adoptive parents to pay upfront for services they have yet to receive. Consider choosing an adoption agency that does not require a placement fee deposit. Instead, look for an agency that requires such a fee after placement of the child.
Work with your state’s foster system, and if you foster a child who becomes available for adoption, you are first on the list to adopt this child. Though the foster care system is to reunite families permanently, sometimes that is not possible, and these children need to find forever families. What better place than with the family who fostered them! Foster care adoptions are much lower in cost as well, at an average of $2,744.
Don’t Let the Cost of Adoption Stand in Your Way
Adoption brings incredible joy to families around the world. For both child and adoptive parents and siblings, this time is extraordinary. Though adoption can be costly, do not let it deter you from this journey. Where there is a will, there IS a way. With many options on paying for the adoption, from loans to grants, tax credits, fundraising, and family support, families globally are finding a way to make the adoption process more affordable.
You can figure out a way to pay for adoption; you just need to think positively and work on how to best financially fund your adoption journey.
