The process of adopting a child can be expensive. Help is available. In general, don’t expect to rely on a single source for funding your adoption expenses. Think in terms of a shotgun approach – funding from multiple sources. Small amounts do add up. Every contribution reduces the overall financial burden. Utilize your own personal network while remembering that your child’s story is not yours or public information.
Be prepared for the occasional negative comment “If you can’t afford adoption, how can you afford to raise a child? Adoptive parents incur substantial expenses that biological parents do not. Before adoptive parents receive a child into their home, they have incurred expenses for agency fees, advertising, court fees, home studies, travel and lodging, and attorneys’ fees. Those expenses are often relatively large amounts and are incurred close together in time which creates additional funding challenges. Persevere and you will find a way.
Grants – Grants are available from a wide range of sources including faith-based organizations and nonsectarian groups and organizations.
Donations & Gifts – Ask for donations and gifts. Start a go fund me page. Gifts from family members may qualify for a tax exemption.
Employer Benefits – Many employers, both large and small, offer adoption expense reimbursement programs. If your employer does not currently offer an adoption expense reimbursement, ask them to start. It is great for employee morale and public relations at a relatively nominal cost.
Military Benefits – Active duty military service members have reimbursements available through the Department of Defense.
Loans – If you are going to borrow money, whenever possible, borrow it from yourself utilizing a home equity loan or insurance policy. Also consider religious organizations and family members. If you are going to borrow money from family, treat it like any other loan – document the loan, create a schedule of payments, pay some amount of interest, and consider providing security for the loan. Avoid using high interest credit cards and retirement loans.
Federal Adoption Assistance
Fortunately, both state and federal governments recognize the value and importance of adoption. Government assistance programs and tax credits exist to help make adoption more affordable and to support prospective parents in their adoption journeys.
One of the ways that the federal government supports adoptive families is through the Title IV-E Adoption Assistance Program, through which adoptive parents may qualify to receive a one-time payment to assist with adoption expenses and/or monthly support payments. Whether a family qualifies to receive federal assistance for adoption and how much (or how often) depends on the specific needs of the adopted child.
Children who qualify for federal adoption assistance cannot qualify for state assistance. Double-dipping into both state and federal programs is not an option. To qualify for the federal program, an adopted child must have special needs and meet other criteria. A child has special needs when three conditions are met:
1. The child is available for adoption.
2. The state has identified a specific factor or combination of factors that make adoption a challenge for the child.
3. The state has made a reasonable effort to place the child without adoption assistance and was unsuccessful.
In addition to the above criteria, all children with special needs who are adopted from foster care for at least sixty consecutive days are eligible for federal assistance regardless of age or the adoptive parents’ income.
Other qualifications for federal assistance include being a child of a minor parent in foster care and dissolution of a prior adoption.
Federal Adoption Tax Credit
Currently, there is a federal adoption tax credit of $14,300 per adopted child for adoptions completed in 2020. For most adoptions the credit is only available for actual expenses incurred. For special needs children, the tax credit is not dependent on actual expenses. Further, the federal adoption tax credit is not refundable. It can only be used when the adoptive family has a federal income tax liability.
Whether a family qualifies for this tax benefit also depends on the household income:
· Full credit is available to families with a modified adjusted gross income below $214,500.
· Partial credit is available to families with a modified adjusted gross income above $214,500, but below $254,520.
· Families with a modified adjusted gross income above $254,520 do not qualify for the federal adoption tax credit.
The Federal tax credit for adoption related expenses changes regularly, so it is important to consult the IRS website, a tax attorney, or adoption attorney for the most up to date benefits available.
It is also important to contact your elected representatives and tell them how important the adoption tax credit is to adoptive families and children. Without the adoption tax credit, many families would hesitate to take the financial risk or simply would not adopt at all. With the increasing competition for scarce federal dollars, it is essential that our representatives know that the adoption tax credit matters to their constituents.
State Adoption Subsidy
Adoptive families in North Carolina may be eligible to receive a one-time reimbursement of up to $2,000 per child to cover the cost of adoption fees. This benefit is intended to help adoptive families with legal expenses. Transportation, lodging, and food costs may also be recovered through North Carolina’s adoption assistance program when the costs are directly related to the adoption.
Children adopted in North Carolina may qualify to receive recurring assistance through the state’s adoption assistance program. Eligibility for this monthly payment or subsidy is determined by the child’s special needs or circumstances that may make adoption without financial assistance challenging. Only adoptions through an authorized state agency are eligible for consideration in this program. Qualifications include:
· Children who are six years of age or older;
· Children who are two years of age or older and a minority;
· Children who are part of a sibling group of three or more children in need of a joint placement;
· Children who are part of a sibling group or two or more in need of a dual placement and one of the siblings meet at least one other criteria; or
· Children diagnosed with a disability, psychiatric condition, behavioral or emotional disorder, or other medical challenges.
When there is a question as to the child’s eligibility or if the child has the potential to develop a condition that would qualify him due to pre-existing conditions, the child may receive Medicaid and additional support until special needs are diagnosed. This arrangement is known as deferred adoption assistance. If you are considering adopting a child with the potential for developing special needs, consult an adoption attorney to make sure this is properly addressed in your adoption agreement.
Qualifying children receive monthly payments from the state to assist the adoptive family with expenses. Payments begin when the adoption is finalized and generally continue until the child reaches age eighteen. However, in some circumstances, an adopted child may be eligible for the benefit until age twenty-one.
The amount of adoption subsidy received by each child is dependent on the child’s needs and circumstances. Special consideration is given to children with therapeutic needs, HIV-exposure, or other exceptional expenses. The standard subsidy guidelines are:
· 0-5 years: up to $475/month
· 6-12 years: up to $581/month
· 13 and older: up to $634/month
· Children of any age with complex medical needs: up to $1600/month
Included in North Carolina’s adoption subsidy program is state-funded health insurance. Adopted children who qualify can receive Medicaid and additional assistance for medical expenses associated with inpatient care, durable medical equipment, dental and orthodontic services, eye and ear health, and personal care services in the home.
Through these programs, North Carolina supports adoptive families by ensuring adoptive children have access to basic and medical care without putting a financial strain on the family.
For more information about adoption assistance, visit the website for the North American Council on Adoptable Children or contact us to find out more about your options.
With more than 30 years of experience helping North Carolina families realize their dream of growing their families through adoption, Bobby Mills can help you understand the various credits and financial assistance options available to you as prospective parents. Having a skilled attorney on your side can help you handle the process as seamlessly as possible, putting you one step closer to growing your family through adoption.
Contact our office today by calling 919-306-2899 or schedule a consultation online.