Financial Resources for Adoptive Parents

Are you looking to grow your family through adoption? It is an incredible, life-changing experience, but it can also feel like a very costly endeavor. The good news is there are many adoption financial support options available, such as grants, loans, employer benefits, tax credits, and subsidies. These can all support the adoptive family looking to adopt a child without facing an overwhelming financial burden.

As you consider your options, you may be wondering how to find adoption financial support for adoptive parents. You have come to the right place. In this short guide, we will break down the costs and how you can find the adoption financial support you need.

Understanding Adoption Costs: What to Expect

Private Domestic Adoption Costs

Private domestic adoption costs in the U.S. vary based on the adoption agency.. When compacted into one flat fee, the price tag hovers around $40,000-$60,000. This covers mandatory professional services, such as legal fees, medical expenses, advertising, the Home Study process, and birth mother expenses.

Foster Care Adoption Costs

Unlike private adoption, foster care is a very inexpensive way to adopt a child. This path costs next to nothing, often with state subsidies offered to foster parents to make this a free path toward parenthood. However, typically this is a foster to adopt situation with older children that have been removed from their birthparents for many reasons.  They can be reunited with biological family at any time.

Adoption Grants: Free Money to Help Fund Your Adoption

How to Find and Apply for Adoption Grants

Before seeking any grants for your private adoption, you will need to have a few things prepared. First, you will need to have your adoption agency secured. You must also first complete your Home Study. This is done with the support of your adoption agency. Most grantors require adoption agency representation, detailed financial records, and proof of the completed Home Study.

Top Adoption Grant Organizations

• Gift of Adoption Fund: Provides grants up to $15,000 to help complete domestic adoptions.
• Help Us Adopt: Offers grants ranging from $500 to $20,000.
• Show Hope: Can provide financial aid to families; requires adoptive families to be working with a licensed 501(c)(3) adoption agency.
• National Adoption Foundation: Offers financial aid without any income requirement.

Get All of Your Adoption Questions Answered

Adoption Loans: Financing Your Adoption Journey

Some families choose to secure loans to complete their adoption journey. This may mean a second mortgage or a line of credit through the bank. The following is a brief breakdown of the types of adoption loans available to offer adoption financial support.

Types of Adoption Loans

• Home Equity Loans (HELOC): Some adoptive families choose to borrow money against the value of their homes. The benefit with a HELOC is that it typically offers a lower-interest rate, and the payments on interest may be tax-deductible.
• Interest-Free Loans: Many organizations offer zero-interest loans. These often involve a faith-based application and the completion of the Home Study.
• Specialized Adoption Loans: Certain credit unions and lenders offered this type of loan, tailored specifically for adoption expenses with flexible terms.
• Unsecured Personal Loans: Banks and other lenders offer general-purpose loans. The interest rate on this type of loan will depend on your credit score.

Federal Adoption Tax Credit: What You Need to Know

In the U.S., the federal adoption tax credit works to alleviate the high costs of adoption. This credit is worth up to $17,280 per eligible child, and includes up to $5,000 that is directly refundable, even if you do not owe taxes. The rest is nonrefundable but can be rolled over for up to five years.  It is best to speak to a tax professional that helps with your taxes before you adopt. You may be able to position your withholding to owe taxes which will go against this tax credit.

How to Claim the Adoption Tax Credit

Adoptive families can claim their adoption tax credit using the IRS Form 8839 when filing their annual tax return. With your domestic adoption, you can claim expenses in the year after you pay them, even if the adoption is not yet final.

State Adoption Tax Credits and Benefits

Some states offer their own adoption tax credits and benefits. While Massachusetts does not offer a state-level tax credit for adoption, it does offer adoptive families an adoption deduction. The Commonwealth allows taxpayers to deduct adoption fees paid to a licensed agency if those fees exceed 3 percent of their Massachusetts Part B Adjusted Gross Income (AGI).

How to Prepare Financially for Adoption

Preparing to adopt a child is a major moment in a family’s life. It is important to prepare emotionally, considering the lifestyle shift and family dynamic changes that may be felt as a result. Another crucial step in the preparation process is to prepare financially.

To prepare for this financial endeavor, first review your family’s budget. Assess your savings, debt, and income. Once you have established your budget, you can begin to consider and pursue funding for your adoption fee. It is also wise to review your state’s tax deductions and learn about any credits for which you may qualify.

Some families choose to take this step on their own, while others seek support from a professional, such as an accountant or financial planner.

How Adoptions With Love Supports Families Financially

Adoptions With Love is a 501(c)3 nonprofit in Massachusetts. Our organization financially supports adoptive families by protecting them from financial risk. There are never placement fees until a birth mother consents to the adoption, making it official.

If a birth mother changes her mind before consenting to adoption, the adoptive family is not held financially responsible for any lost placement fees.

If you are ready to begin your adoption journey, or you would like to learn more about the adoption process to adopt a baby, contact Adoptions With Love today. We can support you and help you move through the adoption journey with ease, guiding you along every step of the way. We are here for you. Call anytime: 617-964-4357 or contact us online.