What are some financial considerations of adoption (please read entire question)?

Question

My wife and I are preparing to adopt a group of three siblings from the foster-care system. We live in Florida. We know about the financial subsidies that the state offers. I am writing today to get comments about ADDITIONAL financial considerations - such as tax tips, additional programs (government or not), etc. for adopted children.

Obviously - we are NOT adopting children to "make money" (pretty ridiculous) but - this will change our family finances. I am a teacher, and my wife is a stay-at-home mom. We just want to make sure we are doing this the "smart" way, and would appreciate your experiences.

Answer 1

Congradulations on adopting from foster care.  Yes take advantage of WIC, foodstamps, and other programs.  Get a Sam's card that is for sure.  

As far as emotional support, read everything you can on foster care children.

Answer 2

There is a federal tax credit as well you can get.  I think it was recently raised slightly but it is in the neighborhood of 10 thousand er child you adopt from the USA and it does not include relative adoptions.  This is how it works if you earn less than 150,000 per year.  Let's say you pay the federal taxes of 4000.00 per year and after you take all your deductions and you are left getting 2200.00 back for a refund.  You paid 1800.00 in taxes that year so you can claim part of the 10,000 you have coming to you leaving you 8200.00 for the following year to claim against your taxes.  I think you get 5 years to claim the 10,000 in total.  

Let's say you only spend 4000.00 on adoption though, you do not get the 10,000 you only get the 4000.00 in tax credit.  Most people pay upwards to 20000.00 though and get the whole 10,000 tax credit.  You even get to claim it the following year if the birthmother changes her mind about adoption.  So let's say you paid 1000.00 for your adoption home study and 2000.00 for the lawyer, even if the adoption fell through you can claim the 3000.00 to that tax credit.  

I hope this helps, I know it's confusing!!

Answer 3

it really depends on your income

Answer 4

Contact your local Department of Human Services, Children & Youth program (which you may already be involved with since the children are in foster care).  There are grants and subsidies available through them to assist with the finances of special needs adoptions, which I believe most foster care situations are considered.  We received a one-time "grant" from our county that assisted with about $2000 towards the cost of adoption.  We also receive a monthly subsidy from the county due to our son's medical needs and medical assistance.  I know people are always accusing parents of "making money" when they ask about these things, but the truth is that if your child qualifies for the funds, you should be able to receive them for the child.  And you always have the tax credit with IRS at the end of the year.  

Good luck to you.

Answer 5

If your children are considered special needs due to their ages, then the oldest, if not all, may be eligible for tuition waivers once they get to college.

Also, when your children move in, you are allowed to claim your children as dependents on your taxes as if they'd lived with you a whole year.  

So, you should get a decent tax refund next year if they move in with you before midnight on December 31 of this year.

The subsidies will greatly help you should you elect to have them.  We did because I have a bad back, and there is no guarantee to how long I can work, so the subsidy, though I am working right now, goes to the children completely, a bill needing paid if I suddenly wasn't working would definitely still fall into going toward the children.

Once your adoption is finalized, if your children are classified special needs by your state (the rule of thumb is if your children receive subsidy, they are special needs), then you will qualify for the adoption tax credit, it's about $10,900 per child, which wipes out your tax liability, and makes you appear to have an overage in the year it's used, giving you all of your taxes paid throughout the year (considering your tax liability is less than $30k) back.

Let's see...oh yes...medicaid.  Your children will have it, so even though they ask you if you'll be covering your children on insurance, the medicaid only works better, because at least with my insurance, they paid less when they knew medicaid covered them, too, and our co-pays were more, so we dropped our insurance on them and will let medicaid carry it out until they're 18.

Answer 6

depending on your income and size of your family you can get food stamps..higher the salary the more money you pay towards it as well as how much the state pays towards it...depends on the state...look into it for your state. tax time you can get earned income on the children under 18 as well as during the year depends on the amount of deponents you claim on your income less taxes or taken out of your pay