There are many resources and supports available to assist families with their decision to adopt.
Some of the children who are adopted through Child Welfare are considered children with “special needs.” Special needs, as defined by the Department of Children and Families includes:
- A child who has one or more special needs as a result of a mental, emotional or physical impairment, behavioral disorder, or medical condition that has been diagnosed by a licensed professional who is qualified to make the diagnosis
- A child who is a member of a sibling group of 2 to be adopted together and one of the children is 8 years of age or older
- A child is a member of a sibling group of 3 or more to be adopted together
- A child is a member of an ethnic or cultural minority of whom reasonable, but unsuccessful efforts to place the child in an adoptive home were made and documented
- The child’s birth and/or family history places the child at risk of having special needs but, due to the child’s age, a reliable diagnosis cannot be made.
Adoption subsidies are available to parents who adopt children who have physical or mental disabilities, or severe emotional problems. In addition to those children who qualify for subsidy through the Federal Title IV-E Adoption Assistance program, state subsidies are available to offset the additional costs of caring for a child with special needs. The subsidy programs are intended to remove financial barriers to the adoption of children with special needs, but they are not intended to cover the full cost of raising a child. The amount of the subsidy cannot be greater than the amount that child would have received had the child remained in a family-based foster care setting. The benefits available through the adoption subsidy programs are determined on an individual basis and may include monthly care and maintenance payments (a daily rate), health insurance coverage.
Adoption Tax Credit
In the summer of 2001, the Federal Adoption Tax Credit was updated. The most important update was to expand benefits to children with special needs adopted from the U.S. foster care system. Originally families adopting from the foster care system could claim the adoption tax credit, provided they had qualifying expenses. Unfortunately, the IRS list of qualifying expenses was limited to the cost of the adoption process, but not the day-to-day costs of raising a child with special needs. However, beginning in tax year 2003, families adopting a child with special needs from foster care, had access to this same tax credit without needing to document expenses. Since tax year 2005, the tax credit is $10,630 and you have the current year and up to the next five years in which to use it. For families that adopted in 2002 or earlier, you can only claim the credit against expenses you paid related to the adoption process.
If you have questions on the adoption tax credit, contact the North American Council on Adoptable Children at 651-644-3036 or firstname.lastname@example.org. You can also visit the IRS website at www.irs.gov or call 1-800-829-1040.