Money, money, money!

The fees of adoption are perhaps the most daunting of anything else in an adoption journey. It is a bit overwhelming when you think of the actual cost of an adoption, especially if you choose a private adoption agency or firm that can range from $17 k to $35k depending if it is domestic, international, newborn,etc. For Keith and I, we have meticulously budgeted and searched for information to get us that much closer to bringing home our baby as soon as we can. Though we would love to be able to pay "out of pocket" for all the expenses there is just no way we would be able to save that amount in less than 5+ years. It is shocking how expensive it can all be.

In order to pay for our adoption we have been able to find and apply for a low rate adoption loan to cover the majority of our expenses and the rest we are saving up for and nearly there. Though the only thing that really has sustained us through our search is knowing about the Federal & State Adoption Tax Credits. The only part about the tax credit is that the monies will not be taxable or credited until after the money is paid up front and can only be paid that subsequent year or the tax year that the adoption is actually finalized. This is really a light at the end of the tunnel for us. It may take time, but at least it will help us pay back the loan well before it is due.

Now depending on your state there are typically credits from $1,000 and up, again depending on the state. Now, in our state of Ohio, the tax credit can be around $1,500. Which is certainly a blessing as every little bit will help you in the long run.  The Federal Adoption Tax Credit is through 2012 for $13,170 to be applied to your income tax and is determined base on how much you were taxed. So you can, depending on your income level bracket, claim up to $13,170 based on how much you paid on taxes.  So, if you paid something like $6,000 in taxes for the year of 2011, then you can claim up to $6,000 on the Adoption Tax Credit that you have spent on your adoption, so you could effectively get $6,000 back.  If you use Turbo Tax, like we do, then look at the first page of your return and it will tell you how much you have paid in taxes for a given year and that should give you a pretty good idea of what you could potentially get back.

Now I must say I am not an accountant, though I did speak to one and this is my understanding of the process. I did contact the IRS directly and spoke to a "real" person. They were very nice and patient and answered all my questions. I suppose they rarely get good calls asking legitimacy questions, but they were very helpful.  Below I have a few links of helpful resources and if you would like to make a comment below or email me feel free. You never know there might be someone wondering the same question you have and they may learn from your questions and answers as well.

[youtube http://www.youtube.com/watch?v=eQryETwRziA?hd=1&w=560&h=315]

HELPFUL INFORMATION FOR THE FEDERAL ADOPTION TAX CREDIT:

FEDERAL ADOPTION TAX CREDIT, from http://www.bethany.org/assets/guides/financing-adoption.pdf

One of the most important factors making
adoption affordable for you is the Federal
Adoption Tax Credit. A tax reduction of up
to $13,170 is available to your family,
depending on your income.
The tax credit applies to both domestic and
international adoptions, but the process is
different. Credit for international adoption
expenses can be claimed only after the
adoption has been finalized.
Some states also offer tax credits or deductions.
Ask your tax advisor about how these credits
may apply to your family’s taxes. For up-todate federal adoption tax credit information,
visit w w w.irs.go

Adoption Tax Credit-2011

http://www.youtube.com/watch?v=eQryETwRziA

http://taxes.about.com/od/deductionscredits/qt/adoptioncredit.htm

http://www.irs.gov/taxtopics/tc607.html