This section examines adoption expenses and sources of reimbursement for expenses, including filing for the federal adoption tax credit, reimbursement for some or all costs by the adoption agency (for children adopted from foster care only), and employer-provided financial assistance. The federal adoption tax credit was established in 1996 to reimburse parents for adoption-related expenses. As of 2008, the maximum reimbursement amount was $11,650; it is phased out for families with adjusted gross incomes between $174,730 and $214,730.31 See Appendix Table 17 on page 76 for detailed data on each indicator.
For about one out of three adopted children, their parents reported paying no adoption-related expenses; for four out of ten, expenses were $10,000 or more. Among children whose adoptions occurred in 1997 or later, eight out of ten have parents who filed for the federal adoption tax credit. Among all adopted children, 13 percent have a parent who reported receiving employer-provided financial assistance.
Adoption-related expenses for the majority of children adopted from foster care are low. Fifty-six percent of children adopted from foster care have parents who reported incurring no adoption expenses; parents of an additional 29 percent reported expenses that were less than $5,000. Fewer than one in ten children adopted from foster care have parents who said the cost was $10,000 or more; see Figure 37.
Figure 37. Percentage distribution of adopted children according to the cost of the adoption, by adoption type
Adoption expenses for children adopted privately in the United States or internationally are typically much higher than for children adopted from foster care. Costs were substantial for a large proportion of privately adopted U.S. children, with 20 percent having adoption costs ranging from $10,000 to $20,000 and 12 percent with expenses of $20,000 or more. However, for 22 percent of children adopted privately in the United States, parents reported paying no adoption-related costs. In general, adoption costs are lower when children are adopted by relatives, and this is particularly so among children adopted privately. Among these children, 94 percent of those adopted by relatives had expenses less than $5,000, compared with 27 percent of those adopted by non-relatives. International adoption expenses tend to be even greater than for privately adopted U.S. children. Adoption expenses were $20,000 or more for 49 percent of children adopted internationally.
Children adopted from foster care are less likely than other adopted children to have a parent use the adoption tax credit or to receive employer-provided financial assistance. Children adopted internationally are more likely than other adopted children to have parents who reported obtaining employer-provided financial assistance to cover adoption-related expenses. Twenty-two percent of children adopted internationally have parents who reported this type of financial assistance, while these figures are 6 and 13 percent, respectively, for children adopted from foster care and privately from the United States. Similarly, the percentage of parents who claimed the tax credit is higher for those who adopted privately from the United States (84 percent) and internationally (86 percent) than for those who adopted from foster care (66 percent). However, these lower rates among parents adopting from foster care may reflect their use of different financial supports. In most states, the public child welfare agency reimburses families for most, if not all, of adoption-related costs for parents who adopt children from foster care. Accordingly, substantial proportions of children adopted from foster care have parents who reported no adoption-related costs (56 percent) or having been reimbursed by their adoption agency (39 percent).