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Adoption

Prospective and Adoptive Parents

Costs of Adopting: A Fact Sheet for Families

4. Resources to Help Defray Adoption Costs

In many cases, tax credits, subsidies, employer benefits, and loans or grants can help with adoption costs.

Tax credits. Adoption tax credits may be available to defray some adoption costs. The amount may depend on family income and any other adoption benefits. Parents may want to check with a tax professional to determine applicable benefits.

Federal tax credits and tax exclusion. Prospective adoptive parents can find information about tax rules regarding adoption at the IRS website. Parents should look for information on the IRS Adoption Taxpayer Identification Number and for Publication 968, Tax Benefits for Adoption (PDF 60 KB), on the Adoption Tax Credit and Tax Exclusion.
State tax credits. Several States have enacted State tax credits for families adopting children from the public child welfare system in that State. Some are restricted to adoptions from foster care, while others are not.

Subsidies and reimbursements for children with special needs. Each State has its own definition of children with special needs, but they often include children who are older, have disabilities, belong to a minority group, or must be placed with siblings. To facilitate the adoption of these children, who often are in foster care, States may provide reimbursements for some adoption costs, as well as subsidies for some children.

Reimbursement for adoption costs. After families have finalized the adoption of a child with special needs from the public child welfare system, they may be able to apply for reimbursement of expenses they paid related to the adoption, including home study fees, travel expenses to see the child, and attorney fees. Most States, under a Federal match program, offer non-recurring adoption expenses reimbursements up to a set limit (which cannot exceed $2,000).
Subsidies. Federal and State adoption subsidies (or adoption assistance) may be available to help adoptive parents pay for the ongoing care of children with special physical, mental, or emotional needs. In addition, some children qualify for Supplemental Security Income (SSI) or Medicaid coverage. The NAIC fact sheet Subsidized Adoption: A Source of Help for Children with Special Needs and Their Families provides more information on this topic.

Employer benefits. Many employers provide a range of benefits for families who adopt, including paid or unpaid leave when a child arrives in the home, reimbursement of some portion of adoption expenses, or assistance with adoption services. (Corporate human resource departments can provide employees with information about any benefits available.) Additional information on this topic is provided in NAIC's fact sheet, Employer-Provided Adoption Benefits

Adoption Loans and Grants. Adoptive parents may be eligible to receive a loan or grant to offset some of their adoption costs. Such programs may have specific requirements regarding the type of adoption that is eligible, or they may give preference to families with the greatest financial need or with other specific characteristics. Many agencies also have adoption grant programs. More detailed information may be found by checking the resources in the next section

Go to Section 5: Additional Resources

This material may be reproduced and distributed without permission, however, appropriate citation must be given to the National Adoption Information Clearinghouse.

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