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Financing
Adoptions
Financing
an adoption, unless you are well off financially, can be daunting.
We provide counseling assistance to individuals and families seeking
to finance their adoption. Below are some common programs that you
may find valuable in financing your adoption. Please contact us
for more in-depth information and to arrange for an appointment.
You may meed to use a combination of resources, from savings to
tax credits, an equity loan, or employer benefits, but many families
find ways to adopt the child of their dreams. If you are thinking
seriously of adopting, do not let the expense deter you. On the
other hand, do not let your emotions blind you to the real costs.
By careful financial planning, you can make adoption an affordable
option for your family and provide a nurturing environment for a
child.
Adopting
from the U.S. foster care system is generally the least expensive
type of adoption, usually involving little or no cost, and states
often provide subsidies to adoptive parents. Stepparent and kinship
adoptions are often not very costly. Agency and private adoptions
can range from $5,000 to $40,000 or more depending on a variety
of factors including services provided, travel expenses, birthmother
expenses, requirements in the state, and other factors. International
adoptions can range from $7,000 to $40,000. |
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Adoption
Financing Options
- Employer
Adoption Benefit Package
Adoption benefits provided to employees as part of an employer-sponsored
benefit program, which are included within their employment compensation
package, in much the same way as group medical, dental and other
friendly benefits are provided. Some examples of these benefits
are: resource and referral services, direct cash payments to help
cover adoption expenses, reimbursement for all or part of qualifying
expenses incurred in the process of adopting a child, or provisions
for either paid or unpaid "parental" or "family"
leave, which may coincide with, or even go beyond, the federal
family leave requirements that are established by the Family and
Medical Leave Act of 1993.
- The
Adoption Tax Credit
If you had adoption-related income and/or expenses, any one or
a combination of benefits, credits and exclusions could substantially
reduce your tax liability. NOTE: The tax credit does not cover
expenses for adoption of a spouse's child (stepparent adoption).
The Adoption Tax Credit is a valuable benefit for adopting
families, but one of the most complicated tax law provisions applicable
to middle-income families. The details of how the credit works,
acceptable expenses, who qualifies, and other "small print"
items indicate that you should check with your CPA, tax attorney
or IRS to verify that you qualify.
The first
step is to learn what the tax credit covers, and how it works
with other incentives, such as employer-paid adoption benefits.
- The tax
credit applies to domestic and international adoptions, but
the procedure is not the same. Credit for expenses for international
adoptions can be claimed only after finalization; for domestic
adoptions, the credit can be applied even if the adoption does
not go through.
- The full
credit can be taken for domestic special needs adoption even
when the qualifying expenses do not reach that limit.
- The credit
of $10,630 is per child, not per year, so even if you claim
expenses paid out over more than one year for one adoption;
the total credit amount remains $10,630.
- Military
Adoption Benefits
If you are on active duty in the military, you are eligible for
reimbursement of expenses up to $2,000 for the adoption of a single
child and up to $5,000 per family per year. There is one caveat:
The adoption must have been arranged through a non-profit agency.
Paid after the adoption is finalized, this benefit is not doubled
if both parents are in the military. Fees that can be reimbursed
include agency fees, legal fees, placement fees, and medical expenses.
Travel expenses were not originally covered when this program
was introduced, but they may be covered now.
Military
parents can exercise an option to have children that are placed
with them covered by their military medical program even before
the adoption is finalized. Under the military's Program for
Persons with Disabilities, military parents may be eligible
to receive up to $1,000 a month for disabled or special needs
adopted children. The military also has a program called the
Exceptional Family Member Program that will ensure that adoptive
parents of special needs children are assigned to bases or duty
stations that can meet the needs of the child.
- Adoption
Loans
While it is far from ideal to borrow money for an adoption, adoptive
families may find a loan necessary to cover the large and immediate
expenses. In some cases, you may be able to pay back the loan
quickly once you receive a tax credit or are reimbursed by your
employer or the military.
- Adoption
Grants
A number of adoption agencies and organizations offer adoption
grants and/or low-cost loans. Some are limited to certain types
of children or adoptions, while others are available to any prospective
parents who meet the organization's criteria.
- Other
Options
Many agencies have payment plans or take credit cards. You can
make installment payments monthly or quarterly. Check with your
agency for creative ways to make payments. For family loans, call
your parents, brothers and sisters. They may have a little extra
cash lying around to help you. You can pay them back as you are
more able later on. Borrow from your 401K or profit-sharing plan,
or, if you absolutely have to, your credit card. Credit cards
are an easy source of cash, but typically charge high interest
rates. Loans on retirement plans offer somewhat lower interest
rates; however, if you lose or change jobs and cannot repay the
loan within a short time period, the loan becomes a taxable withdrawal.
In addition to income taxes you will have to pay on the withdrawal,
you will also have to pay a 10 percent penalty if you are younger
than 59.
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Seattle (206) 452-2007
Puyallup (253) 604-0466
Toll Free (800) 643-3960
Fax (253) 604-0465
Office Location: 10116 - 116th Street East, Suite 201 |
Puyallup, WA 98373
Mailing Address: PO Box 731128 | Puyallup, WA 98373
For more information or to set up a homestudy, click here to email us.
www.AdoptionHomeStudyService.com
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