How did you finance your adoption?

[JR'smama777]

I've been really praying about adoption for years and am started to feel like it is for my family. I'm a single mama of a 5 yr old and am looking to the possibility of adopting either from Haiti or perhaps domestically thru foster care.

I'd love to hear about how some of you financed your adoption?

And can you tell me about the tax credit?

Any info would be appreciated.

[Starr]

For us we took out a loan through our local bank. They granted us up to a certain amount, even still we ran over with traveling costs and the price to send paperwork. So towards the end we used our credit cards. I know of some people who have gotten loans from family members, had fundraisers, applied for grants and so on so there are other ways. There is a tax credit and this is the first year we will be using it so I'm not certain on how exactly it works.

[Killick]

We pulled the equity out of the house. We will still have a bit more to finance, probably though a home equity line of credit, but it was the easiest and best way for us. We are adopting from Colombia.

[annethcz]

We mostly used our savings and tax refund. We also payed for a lot of it just out of our day-today budget. Rather than large sums of money, most of our expenses were $1200 one month, $500 the next month, $2000 a couple of months later, etc. We also took a little bit out of a home equity loan. For our travel costs, we put them on our credit cards and it took two months to pay that off.

I'm really glad that we didn't go too far into debt to pay for our adoption. Just adding DS to our family was stressful enough- I can't imagine how much harder it would've been if it had added extra financial problems to our family as well.

As for the tax credit, here's a link to the IRS explanation:
http://www.irs.gov/taxtopics/tc607.html

For our family, we were unable to use the entire credit at one time. Because of the number of children we have, and the other credits we qualify for, we were only able to use about $3000 of the credit last year. But we have up to 5 years to take the entire credit.

[queenjane]

I'm in the process of adoption from the foster care system (i've been approved and am waiting to be matched)....its free. I think when the adoption is finalized there is a small court fee (under $200) but thats it. Some people pay for their homestudy (usually $1000-3000)when adopting from the state using a private agency, but although i'm using a private agency, i didnt have to pay anything, and can apply for any child in the US who is in foster care. Most likely the child i'm matched with will also come with a monthly subsidy and a medical card.


Katherine

[Sierra]

We have foster-adopted. It is the most financially feasible way to go. There were some costs for us. For instance, we had to do some work on our house to get it to pass licensing (example...they require a certain type of lock on home exit doors in our state, which did not fit our doors due to age of the house, so we had to get new doors entirely and handles and locks for them). I think each time we have been foster licensed, home stuff has totaled $2000-3000. The cost came up again the second time because we had changed the ages for which we were licensed and our housed needed more babyproofing.

During the time you do foster care, your state will reimburse you for care, and sometimes other costs (transportation to therapies or dr. appts for example). The amount of reimbursement, and what is reimbursed, depends on the state. In my state, my dw and I end up paying something out of pocket each month for care.

When it comes to the adoption, we paid our attorney $1000, which was reimbursed fully by the state after the adoption. Because of our ds' special needs, ds' receives a monthly "adoption support" subsidy to pay for things like therapies and special foods (most kids who were foster-adopted qualify for some type of subsidy, though amount will vary by the child's circumstances...some kids adopted through agencies, etc. will also qualify due to special needs). He also will be eligible for Medicaid through his childhood, which we can use as a secondary insurance, as this was a part of his "adoption support agreement."

We have another foster-adoptive placement, and we may also seek a private, non-agency adoption in the future (which we are anticipating will cost $3000-10,000 in our particular area if we get a match within state). So far, we've been able to scrounge up money as needed (and my dw's parents have helped a little), but when we do private, it will be more of a stretch. We do have a small amount of inheritance money we can use, though it will be eaten up entirely by the whole thing.

We feel strongly that we really don't want to enter into parenthood of any particular child having aquired a bunch of debt. Since raising kids is so expensive as it is, and since any kid could end up having special needs, it feels yucky to start out already in the hole. We want to be smart with our money, and fortunately, so far in our lives we've managed to get buy without aquiring student loans (amazingly...though it meant I worked four jobs while going to school even with scholarships!), and without any credit card debt. The only debt we have is our home loan, and a small personal loan we got to help pay for part of a used minivan we bought (we used some of our cash savings for the rest). We think it is smart to "pay as you go," given the economic realities of this day in age. We looked into using home equity, but decided against it because we feel home equity is used most appropriately in our case when it pays for home improvements that increase the value of the house. Then it can help pay for itself.

We would qualify for a small personal loan, but probably not a huge one. I don't think the tax credit will help us since we don't usually owe anything in taxes (???).

I don't know.

[queencarr]

We used a combination of savings, careful monthly spending so we had more leftover, and credit cards to adopt from Korea. We also used the increased tax refund due to an extra dependant to pay for court costs. We also asked our families that for any gifts they would normally give us, like Christmas, birthdays, whatever, that they contribute to our adoption fund instead. It felt really wierd to do this at first, but dh's parents tend to go overboard at Christmas, anyway, and it had the side benefit of taming that as well! We also had a fundraiser garage sale, where we asked for everyone we knew to clean out their closets; we made over $1100 in 2 different sales these items, and donated the rest and were able to take a charitable deduction for them. We still have our travel expenses hanging over; I am hoping to have those paid off with this tax refund.

Sierra, about the tax credit...do you pay federal taxes through out the year and so don't owe any at tax time, or do you not pay during the year and don't owe? If you are paid up so that you just don't owe anymore, you should qualify for a refund of what you paid in over the years, assuming your expesnes meet or exceed that amount. It will list it on your paystubs what your year to date Federal income taxes paid are--that is what is potentially refundable. Also, you should check dw's federal taxes. I think only one of you can claim the credit, so you would want to file it under whomever pays the most taxes (or is likely to pay the most taxes over the next few years if it will rollover), since you can't file together, right?

How the tax credit works: There is a $10000+ (I don't remember the exact figure as it has changed recently) adoption tax credit. You can take the credit over a 6 year period against your taxes, so that you essentially zero out in taxes paid equal to the amount you spent up to the $10000+ figure. If you make enough that you would normally pay $10000 in taxes/year, then you will only need to take it one year. If you make less, you can roll the remaining amount of credit forward for up to 5 more years. If you adopt a SN child, then you can take the full $10000+ amount even if your expenses are not that high. If you adopt domestically, you can file for the credit before you finalize the adoption, internation adoptions have to wait until the tax year that you finalize.

In addition to the adoption tax credit, you can claim the child as a dependant once they are placed with you, and can also claim the child tax credit and if you income is low enough, the earned income credit for them as well. you will need a SS# for the child to file these, though. HTH!