Affording Your Adoption

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

Did you know that there are several methods available to you to assist you in funding your international adoption?  

1. Most of your adoption costs will be returned to you through federal tax credits. 
   It is true. For the 2010 tax year, adoptive parents may take advantage of up to $13,170 in refundable tax credits to offset qualifying adoption expenses. 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 the IRS website for further details:

   Guidance on Expanded Adoption Credit Available for Tax-Year 2010

   Adoption Benefits FAQ

   Draft Form 8839 for 2010 Qualified Adoption Expenses

   Additional Resources:

   Watch this Adoption Tax Credit "in a nutshell" video which helps explain how the Adoption Tax Credit will work for you. (Provided by Jackson Hewitt, a sponsor of the Dave Thomas Foundation)

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

   Note for those that completed their adoptions in 2007: If you finalized your adoption in 2007 and haven’t yet claimed your adoption tax credit, you have until April 15, 2011 to file a 2007 amended tax return to claim the credit. 

2. Many States offer extensive tax credits – up to $10,000.
   To discover more about your state's specific tax credits, contact your state Division of Family Services and State Tax Office to ask about tax credits for adoption and/or to find out if you qualify for any special state subsidy programs. Some states reported their 2009 state tax credits to Children's Hope. For a partial state list, click here.

3. Corporate Matching Gifts.
   There are many corporations that have adoption assistance programs (AAPs). 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/ ,  http://abanet.org/family/advocate/sp97tax.html or the Dave Thomas Foundation's Adoption-Friendly Employer List for important details.

4. Military, Nonrecurring Program.
   There is a one-time subsidy program available for full-time military personnel. Currently adopting couples and singles can receive up to $2000 per child per year with a $5000 cap per member. Many military personnel are unaware of this 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. 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.

5. 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.

   Source: Dependency Exemption

6. 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. The check you write will be added to your current loan balance. Ask your bank for details. Rates are usually low and the 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.

7. Other Sources for Adoption Loans or Grants:
   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.  
   Show Hope is an adoption grant ministry providing financial resources to families of greatest need.
   A Child’s Desire provides adoption grants in support of hard to place children, those that are older or have special medical needs.
   A Child Waits provides adoption grants to families adopting special needs or older children, internationally. Financial assistance is based on the need of the child, financial ability of the prospective adoptive parents and availability of funds. Low interest loans are also available to adopting families. Before potential adoptive families apply to the foundation, they should first try to obtain funds from other sources such as friends, relatives and home equity loans. Visit their website for current interest rates.
   The Abba Fund provides no interest loans for Christian adoptive families. To help maintain funds for future families, this is a last means of adoption financing.
   Lifesong for Orphans offers interest free loans to help couples overcome the high cost of adoption. Even more exciting, Lifesong offers grant matching with your church adoption fund, giving you a way to discuss adoption funding with your church supporters, family and friends. 
   The Oxford Adoption Foundation is a nonprofit charitable foundation formed in 2003 by Murray and Valerie Wise of Naples, Florida, after they adopted seven-year old twins from Russia. Oxford Adoption Foundation was formed to help families to adopt internationally by providing low interest loans to assist with the expenses associated with the international adoption process.
   Resources for Adoption provides, upon registration, a current chart of over 40 available adoption grants.

   
   For more adoption loan and grant opportunities, click here.
   

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