Financing Your Adoption

WAYS TO FINANCE ADOPTION AND INFORMATION ON FEDERAL AND STATE TAX CREDITS

Some wonderful people want to adopt a child but don't realize that, in many cases there are finances available to cover most if not all of the adoption costs

1. Most of the costs of an adoption will be returned to you through federal tax credits.
   Yes it is true. Current tax filing for the 2007 tax season provides for $11,390 adoption tax credit. The 2008 adoption tax is $11,650. We strongly recommend adoptive families consult a legal or tax professional for more details. You should get Publication 968 – Tax Benefits for Adoption, which can also be downloaded online, click here or CHI will send you a copy.

   Related Website: www.AdoptionTaxCredit.com - Information and support on the adoption tax credit.

2. Many States offer extensive tax credits – up to $10,000.
   To find out about your state tax credits, try the web using the address: http://www.state.yourstate.us, for example: http://www.state.mo.us Contact your state Division of Family Services and State Tax Office to ask about your state’s tax credits for adoption or to find out if you qualify for any special state subsidy programs. A Checklist on Title IV-E Adoption Assistance and State Adoption Subsidies for Adoptive Parents

3. Corporate Matching Gifts.
   There are many corporations that have adoption assistance programs (AAPs). Click on 'resources' on the header above. Check with your employer’s human resource department to see if they have an AAP or other adoption assistance benefits. On the web, check out http://adopting.org/employer.html , http://www.adoptionbenefits.com/ or http://abanet.org/family/advocate/sp97tax.html for very important details.

4. Military, Nonrecurring Program.
   There is a one-time subsidy program available for full-time military personnel. Currently adoption couples or singles can receive up to $2000 per child or $5000 maximum for siblings. Many military personnel do not know this is available to them.

   Military families are entitled to adoption benefits of up to $2,000 a year for reasonable and necessary expenses associated with adoption finalized after October 1, 1990, whether they are infant adoption, intercountry adoption , or adoption of children with special needs. The benefits cover the following:

   • Public and private adoption fees charged by an adoption agency in a foreign country;

   • Adoption placement fees, including fees charged to adoptive families for counseling;

   • Legal fees, including court costs, in connection with services that are unavailable to military personnel through their legal assistance office;

   • Medical and hospital expenses of a newborn; and

   • Medical expenses incurred by a birthmother.

   • Benefits are paid after an adoption is finalized, and apply to both singles and couples.

   • http://www.militaryadoption.com

5. Nonrecurring Federal Adoption Program
   This is a one-time federal adoption program, administered by the states, and includes foreign-born children adopted by U.S. Citizens. State Reimbursement A reimbursement for non-recurring adoption expenses (agency fees, legal costs, and transportation) is available through each State for families who adopt children with special needs (children from minority cultures). Half of the expenses are paid through State funds, the other half through federal funds up to $2,000. The benefit differs by State depending on the cost of the adoption , State rules, and public awareness. Reimbursement for Non-Recurring Expenses

6. Dependency Exemption - Tax Savings
   Adoptive parents may take the same dependency exemption on their income taxes for their adopted children, and children placed with them for adoption but not yet finalized, as they would for their biological children. The exemption reduces their taxable income. The amount of the dependent exemption is adjusted annually to reflect the cost of living. The main point to remember is that families must provide more than half of their children's support to list them as exemptions. Some adopted children come with subsidies, which may provide more than half of their support. For example, if a child receives $5,000 a year in subsidies, the adoptive family must provide $5,001 or more a year to claim the child as an exemption.

   Click here to check out: Dependency Exemption

7. Loans and Second Mortgages.
   Refinance 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 at a 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. The check you write will be added to your current loan balance. Ask your bank for details. Rates are usually low and interest tax exempt. If you like you might try: Laura@amcmort.com 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.

8. Other Sources for Adoption Loans or Grants:
   China Care provides financial aid to families who qualify by adopting special needs or older children. This is in the form of a grant, a low-interest loan, or a combination of both. The amount awarded is based on family finances and need, although it usually falls in the $2,000 to $4,000 range.
   Brittany's Hope provides financial grants to specific international special needs, older and sibling children. They place money on waiting children submitted by placing agencies in the hope of finding potential families interested in the child.
   

9. Dependency Exemption on Taxes

10. Suggestions from the National Endowment For Financial Education
    Visit the site: www.nefe.org for detailed information.

11. Look at the top of this page and click on resources.

12. For excellent overall information!! go to: http://www.adoptionfinancing.com/