What it costs, Page 2

Benefits: Military and Employer

If you’re in the military and on active duty, you can be reimbursed to the tune of $2,000 for the adoption of one child if you’ve used a non-profit agency for the process. If both parents are military, you can get twice than amount.

There may be other benefits for children with special needs, and a program for medical coverage even before finalization. Check with your commanding officer for details.

Even if you don’t work for Uncle Sam, your employer may provide reimbursements, leave or other benefits. For a list of companies that do, and what they provide, see the Employer Adoption Benefits page at Adoption.Com.

The Dave Thomas Foundation For Adoption offers some tools that may help convince employers who aren’t offering adoption benefits to change policy. Their Adoption-Friendly Workplaces in America program has an employee toolkit that may get things moving in that direction in your company.

The Adoption Tax Credit

Yes, there is one, and it can save you money, but it’s one of the more convoluted of tax laws so unless you have CPA blood running through your veins, and possibly even if you do, HIRE A PROFESSIONAL.

To start with, you’re going to need Form 8839 and your child’s Social Security or Tax ID number.

Here’s a brief summation of what the IRS has to say:

Adoptive parents can claim a tax credit currently, as of January, 2007, set at a maximum amount of $11,390 per child for expenses incurred during the adoption process which include adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging while away from home), and other expenses directly related to and for which the principal purpose is the legal adoption of an eligible child.

The tax credit is for each child adopted and the maximum amount cannot be claimed each year if the adoption process takes longer than one year, but is carried forward until completion.
In the case of foreign adoption, the tax credit cannot be applied until the adoption is finalized. For a domestic adoption expenses can be claimed for as they occur and so can be made even if the adoption is not completed for any reason.
The tax credit does not cover expenses for the adoption of a spouse’s child.
The full amount of tax credit can be claimed in the case of the adoption of a special needs child even if the actual expenses incurred are less than $11,390.
If a couple file separate tax returns, the amount of the tax credit claimed can be divided between them in whatever proportion desired.
The tax credit can only be claimed up to certain income limit, phasing our gradually at $170,820 and going completely if income is above $210, 819.

In addition some employers may offer a fringe benefit (Employer Provided Adoption Benefits) where they will reimburse certain amounts for qualifying adoption expenses and these can also be excluded from your gross income. The expenses claimed for cannot be the same as those applied for in the tax credit.

Check with your local state tax office to see if there are any local allowances for adoption expenses, and always check with your own tax advisor.

Previous Page Next Page

Credits: Sandra Hanks Benoiton