Affording Adoption

There are a variety of different options for adoptive families to consider when thinking about how to finance their adoption.

85Adoption STAR CEO/Founder Michele Fried recently shared a link to an article entitled, “How American Families Can Afford Adoption.” The article was written by Susan Johnston and appeared in U.S. News and World Report on January 27, 2015. You can find the article via the following link: How American Families Can Afford Adoption

Here are some highlights of suggested options from the article:

“Adoption tax credit. For 2014, the IRS gives adoptive parents a maximum adoption tax credit (to offset qualified adoption expenses such as legal fees and travel costs) of $13,190 per child, which phases out for modified adjusted gross incomes between $197,880 and $237,880. ‘If you adopt twins, then you can claim double the tax credit,’ Witt says. ‘Or even if you have a [domestic adoption] situation that falls through, you can claim it towards the expenses that you’ve lost.’ The credit cannot exceed your tax liability, but you can carry any excess credits into the following year. Consult your tax preparer if you’re unsure of how this applies to you.

Adoption grants. Jeremy Resmer and his wife raised over $47,000 so they can adopt twin girls from Congo debt-free, and about two-thirds of that money came from grants. (The Congolese government has put all adoptions on hold, so Resmer, his wife and their 3-year-old son are currently living in the Congo bonding with the girls and waiting for the adoption to finalize.) The pair did exhaustive research on adoption grants, and Resmer wrote and published an e-book called ‘Fund Your Adoption: A Step-By-Step Guide To Adopt Debt-Free.’ ‘We had to look in a million different places to find all the grants,’ he says. ‘Certain organizations … will only grant to you if you’re Christian or married, and sometimes income eligibility requirements will come in. Some organizations will only provide grants for domestic adoptions.’ Because the application process can be time-intensive (collecting letters of recommendation or meeting with a pastor, for instance), the couple applied for 10 grants that they felt they most closely fit the award criteria, and also looked at grants with the highest award ranges. They were awarded six of

Not everyone will qualify for grants because some are income-based. However, a growing number of employers now offer adoption assistance. In fact, a 2012 Aon Hewitt survey of 1,000 major U.S. employers found that over half offered this benefit, compared to 12 percent in 1990. Fingerman says these benefits can range between $2,000 and $10,000 depending on the employer.

Loans. Sometimes people take a short-term loan to cover adoption costs and use their tax return (with the adoption tax credit) to repay the loan. ‘There are adoption loans out there, but I always tell my clients just because a loan has the word adoption in front of it doesn’t mean it has most favorable terms,’ Witt says. ‘Explore a general loan, home equity loan and see what the best terms are.’ Not everyone has home equity they can borrow from, but Witt says having a line of credit ready to cover adoption expenses can be smart (so long as you’re realistic about what you can afford). ‘You don’t know exactly how much you’re going to need and when you’re going to need it,’ she explains.

Some people also get a gift or interest-free loan from parents who want to be grandparents. ‘People sometimes have to travel to other parts of the country where the birth mother lives, so families have given them frequent flier miles or points to the Marriott,’ Fingerman says.

Adoption STAR has covered this topic in several different blog posts over the years, including the following post from 2011: Ways to make adoption affordable for your family

Within the aforementioned blog post, you’ll find a link to a PDF version of a print document we share with all of our prospective adoptive families. It’s entitled “Affording Adoption at Adoption STAR,” and it’s well worth reading over.