Financial Resources for Adoption

Adoption is a question of love, not money – but financial issues do play an important role in the adoption process.

If adoption is on the horizon for you, here’s a quick guide to the costs involved and some of the financial resources available to prospective adoptive parents.

What’s the cost of adoption?

Adoption costs vary. Working with an adoption agency will be more expensive than an independent adoption, in which the adoptive parents and an expectant mother get in touch without the help of professionals.

In general, you can expect an average cost of around $15,000 to $50,000 for the adoption process. This may include:

• Legal fees – including paperwork, court filing, and all the legal counsel you’ll need throughout the adoption journey
• Home study – wherein adoption professionals will comprehensively assess your home and your suitability to be an adoptive parent
• Travel expenses – you may need to travel to another city, state or even another country
• Agency fees – if you take the agency route, expect additional fees for the additional support you’ll receive
• Insurance – some prospective parents choose adoption disruption insurance so that if the process is halted, they can recoup some costs and be more financially able to try again in the future
• Medical costs – adoptive parents may be asked to cover the birth mother’s medical costs, although in many cases Medicaid will already pay for this

Adopting a child from foster care will be much less expensive, as there are state and federal adoption assistance programs to ease the financial burden. Fees will be minimal, and some foster care adoptions are even free – but of course, it’s important to choose an adoption route that’s right for your family and not base this decision on cost alone.

Financial resources for adoptive parents

There are a number of resources to help prospective adoptive parents afford the cost of adoption.

Eligible employees of Harvard University can get up to $5,000 to help with adoption costs, through the Harvard Adoption Assistance Plan. These funds are available regardless of financial need and can cover any expense directly related to a legal adoption. More information and resources, including contact details to complete an application, are available online.

Adoptive parents may also be eligible for federal and state tax benefits. The federal government offers a tax credit for qualifying adoption expenses, which in 2020 was $14,300 per child. A tax credit means that this money is directly subtracted from the amount of tax owed, and it can be carried forward for up to five years, providing an important financial cushion for adoptive parents. Be aware that this credit only applies to taxpayers with an income below $254,520.

Employer-provided adoption assistance is also excluded from income, so you won’t be pushed into a higher tax bracket or need to pay more taxes if you receive an adoption benefit from your employer.

Additional resources in Massachusetts

In Massachusetts, you may qualify for a personal income tax exemption for fees paid to a licensed adoption agency.

Also available to adoptive parents is the Massachusetts State Adoption Assistance Program, which provides additional benefits for families who adopt children from foster care. Benefits include subsidies, adoption counseling, and the support of an adoption worker.

Taking out a loan

Some families choose to take out a loan to help cover the expenses of adoption. Specialized lenders may offer a tailored adoption loan, but a traditional personal loan can also be put toward adoption costs. While credit cards are another option, a standard personal loan will likely offer a better interest rate.

Adoptive parents who own their home can also consider a home equity loan, which usually has lower interest rates than what you’d pay on a credit card or personal loan. Interest on home equity loans is also tax deductible, to further reduce the cost of borrowing.

Final thoughts

Adoption is a significant choice, with numerous factors to consider. If you have questions or concerns about the financial aspect of adoption, chat with a financial professional about your options.