Funding & Affording Your Adoption

Funding & Affording Your Adoption

Everyone who has or will adopt internationally understands that it is an expensive process. Families must budget, save, and creatively find ways to fund their adoption. It's been this way for decades, and will remain so for the forseeable future. Fortunately, corporations, foundations, and even some politicians have diligently worked towards easing the financial burden.

The Federal Adoption Tax Credit .
Many of the fees associated with adoption may be taken as a credit on your tax return. The tax credit calculation can include adoption expenses, court fees, attorney fees and travel expenses. We strongly recommend adoptive families consult a legal or tax professional for more details or visit and for more information and to download important tax forms.

Expansion of The Adoption Credit
For 2010, the adoption credit increased to $13,170 per eligible child (a $1,000 increase over 2009). This increase applies to both non-special needs adoptions and special needs adoptions. A The Patient Protection and Affordable Care Act (the health reform bill passed in March 2010) made the adoption tax credit refundable for tax years 2010 and 2011. When a credit is refundable, you can get more money back from the IRS than you have paid in federal taxes. If you normally get a refund, that means the refund would likely increase by $13,170 per child as long as you do not exceed the income guidelines (and have any other tax liability that would reduce your refund).

The The Adoption Tax Credit has been extended to December 2012. However, adoptions finalized in 2012 will not receive their savings as a refund, but will instead be able to use the credit towards taxes owed. For more informaiton on this confusing topic, please visist NACAC.

Many States offer tax credits
At the time of this writing, 15 states offer varying amounts of tax credits to qualifying families. Please do a web search on your state, or contact your adoption agency for more information.

Corporate Matching Gifts.
There are many corporations that have adoption assistance programs. The Dave Thomas Foundation's Adoption-Friendly Employer List offers the most detailed information on companies offering these benefits.

Military, Nonrecurring Program.
Military families are entitled to adoption benefits of up to $2000 a year for reasonable and necessary expenses associated with adoption finalized after October 1, 1990, whether for infant adoption, intercountry adoption, or adoption of children with special needs. For more information please visit: Military Pay: Adoption Reimbursement

Loans and Second Mortgages.
Refinancing your house/home equity loan - If you own your house (part of it, anyway) you may be eligible for a home equity loan, or you may be able to refinance your mortgage. This is typically the lowest-rate loan from your bank. Quite often, the interest is tax-deductible. Also, most banks offer a home equity line-of-credit. You will be given a checkbook you can use to pay expenses as they arise. Ask your bank for details. Borrow from your 401-k - Many 401-k plans now offer loans from your retirement savings. This is usually a very-low interest rate. Many people are able to fund their entire adoption from this one loan. Talk to your employer to see if this is an option for you.

Adoption Loans or Grants:
Resources4Adoption has taken the pain out of searching for grants and loans to assist with adoption expenses. Please view their website for a current list of resources.