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Where to Begin: Can we afford to adopt?

Federal and State tax credits and other adoption financing

You may be eligible for a tax credit up to $13,360 (2011) for qualifying expenses paid to adopt an eligible child.. This credit is per each eligible child you have attempted to adopt (e.g. If you adopted twins, the potential credit is $26,720, $13,360 times two). The adoption credit is a dollar-for-dollar reduction of your tax liability. Although the credit generally is allowed for the year following the year in which the expenses are paid, a taxpayer who paid qualifying expenses in 2011 for an adoption, which became final in 2011, may be eligible to claim the credit on the 201 return. You claim the credit by properly filing form 8839 and instructions with your form 1040.

According to the IRS: "Qualifying adoption expenses are reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including meals & lodging) and other expenses related to, and whose principal purpose is for, the legal adoption of an eligible child."

Most adoptive individuals and couples qualify for up to the full available credit, if your modified adjusted gross income (modified AGI) is $182,180 or less (for 2009), the income limit will not affect your credit or exclusion. If your modified AGI is more than $182,180, your credit or exclusion will be reduced. If your modified AGI is $222,180 or more, your credit or exclusion will be eliminated. Generally, if you are married, you must file a joint return to take the adoption credit or exclusion. If your filing status is married filing separately, you can take the credit or exclusion only if you meet special requirements.

Many states also offer tax credits, in some cases as much as the federal tax credit. Visit to find additional information about your state's adoption credit, if any. You can also contact your state division of family services or your state tax office to ask about your state's tax credits for adoption or to find out if you qualify for any special state subsidy programs.

Note: The expanded tax credit sunsets in 2011 and reverts to the original $5,000 credit as original enacted.

We highly recommend you seek the advice of a tax professional before filing your taxes.

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.

Military, Nonrecurring Program

For active duty military personnel, there is a one-time subsidy program available. Currently adoptive couples or singles can receive up to $2000 per child or $5000 maximum for siblings. Military families are entitled to adoption benefits of up to $2,000 a year for reasonable and necessary expenses associated with adoptions, whether they are infant adoptions, inter-country adoptions, or adoptions of children with special needs. Benefits are paid after an adoption is finalized, and apply to both singles and couples. For additional information, visit

Nonrecurring Federal Adoption Program

This one-time program, administered by the states, includes foreign-born children adopted by U.S. Citizens. A reimbursement for non-recurring adoption expenses (agency fees, legal costs, and transportation) is available through each State for families who adopt children with special needs (children from minority cultures). Half of the expenses are paid through State funds, the other half through federal funds up to $2,000. The benefit differs by State depending on the cost of the adoption, State rules, and public awareness. For additional information visit

Home equity loan

Homeowners may be eligible for a home equity loan. This is typically the lowest-rate loan at a bank. Quite often, the interest is also tax-deductible. Again it is recommend you consult a tax professional prior to finalizing your taxes. Home equity loans can be funded through a line of credit, which allows you the flexibility to draw on the qualifying loan amount as needed, check with your preferred banker for details.

An alternative to a home equity loan is simply refinancing your existing mortgage and cashing out earned equity.

Borrow from your 401(k)

Many 401(k) plans 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. Be mindful that should you leave your current employer the loan must be repaid upon termination and cannot be rolled to another plan.

National Endowment For Financial Education

Visit for detailed information.


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The goal of International Adoption Resources (IAR) is to provide orphans in our global community with a brighter future by connecting them to prospective adoptive parent(s) empowered with informational and financial resources. IAR is not an adoption agency, but we work closely with US based international adoption agencies. IAR supports adoptive parents interested in providing homes to international orphaned children.

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