How to Grow Your Forever Family

A Guide to Child Adoption Costs

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Giving a child a "forever family" is every adoptive parent's dream. To these prospective parents, no matter how many hoops there are to jump through, how much scrutiny one might face, and how long they have to wait, fulfilling the dream of parenthood is worth the sacrifice.

On the flip side, however, the financial costs of adoption can become a nightmare. Although adoption through a public agency may be free or inexpensive, other adoptions can cost $40,000 or more, according to the Child Welfare Information Gateway.

This guide will walk you through the expenses of adopting a child with the goal of minimizing those costs. By exploring various adoption scenarios and featuring advice from adoption experts, we hope to ease you into the adoption process with a realistic idea of what to expect.

Sample Adoption Budget

As you prepare to finance your adoption, creating a sample budget will help you figure out where your money needs to go. Below you'll find a sample budget for a couple who is pursuing a private domestic adoption of a newborn through an adoption agency:

sample estimated costing for adoption

Sources: Child Welfare Information Gateway, U.S. Department of Health and Human Services

Types of Adoption

Approximately 100,000 - 150,000 children are adopted across the United States every year. While some children are adopted after a journey through the U.S. foster care system, others are adopted at birth. In 2018, U.S. families also adopted over 4,000 babies and children from other countries, according to the Bureau of Consular Affairs.

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PRIVATE AGENCY

Adopting through a private agency is a popular option for families with the financial resources to pursue this path. By adopting a child through an agency, families can rely on agency contacts, resources and professionals to help with the transition and prepare them for the journey. Another reason families choose private adoption is if they have their hearts set on a newborn child. Most other types of adoption, including international and public agency, cannot guarantee a newborn.

Advantages

  • The possibility of adopting a newborn child
  • Adoption agency resources and support are at your disposal

Disadvantages

  • Private agency adoptions tend to be very expensive
  • Waiting lists for newborns can be long

Average Cost
Private agency adoption ranges from $5,000 to $40,000, with an average of around $30,000.

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PUBLIC AGENCY/FOSTER CARE

Adoption through a public agency, also known as foster-to-adopt, is the most affordable way to adopt a child. By opening your home to a foster child with the goal of adoption, you put yourself in the position of adopting a child in your care once he or she becomes available for adoption. Continuing financial support may be available too, particularly if you are adopting a special-needs child.

Advantages

  • Very low cost
  • Financial support may be available
  • You can adopt children who are in desperate need of a home

Disadvantages

  • You may have little choice in the child you adopt
  • You will most likely not receive a newborn child
  • Children from foster care may have endured emotional or physical abuse or stress

Average Cost
Public agency adoption is typically very inexpensive, typically ranging from free to around $2,500.

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INDEPENDENT

Independent adoptions can come about in a number of different ways. From family members who adopt another member's child to parents who adopt a newborn from a teenage mother, these adoptions vary in scope and difficulty. While independent adoptions are often negotiated by parties involved in the adoption process, lawyers are typically involved in creating the legal documents that fulfill the adoption agreement. Because of this, independent adoptions are still rather expensive, with the only real cost savings coming from avoiding agency fees.

Advantages

  • Negotiating an adoption on your own terms
  • The possibility of avoiding some fees, including agency fees

Disadvantages

  • There is no guarantee you will be able to adopt a child once he or she is born
  • Negotiating terms on your own leaves room for stress and doubt

Average Cost
Independent adoptions range in cost up to $40,000, but the average is from $10,000 - $15,000.

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INTERNATIONAL

International adoption involves a child being placed into the United States from another country. Because of the complexity and red tape involved in securing citizenship and dealing with foreign governments, this tends to be one of the most expensive routes. After completing all of the traditional requirements for adoption within the United States, adoptive parents who choose the international route must also meet another country's requirements as well. These requirements range in difficulty depending on the host country.

Advantages

  • Children of all ages are available
  • You can adopt children who might otherwise remain in an orphanage

Disadvantages

  • International adoptions are generally very expensive due to government-mandated fees and travel expenses
  • A country may change the rules about international adoption while your adoption is in progress

Average Cost
International adoptions usually range from $15,000 to $30,000 (but can be as cheap or expensive as $5,000/$40,000).

Costs of Adoption In-Depth

The cost of adopting a child depends on many factors, including the type of adoption you choose. According to Mike Leply, President of Chicago Area Families for Adoption, an adoption advocate and creator of Adoption Lantern, the main costs you'll want to plan for fall into three categories: legal, travel, and child-related.

Legal and Administrative Expenses

Legal and administrative expenses can be easily researched depending on the type of adoption you choose. If you're working with a private adoption agency on a domestic or an international adoption, you'll typically receive a list of fees you can plan for. If you're adopting independently, on the other hand, you may not receive that type of support. Legal and contractual expenses for either type of adoption may include:

  • Application fees
    You may need to pay an initial application fee to get the adoption process started.

  • Home study
    A home study, which is a private review of your household conducted on behalf of an adoption agency or a government agency, is required for all adoptions in the United States. The U.S. Department of Health and Human Services' Child Welfare Information Gateway has previously estimated that home study costs can range from $500 to $3,000, though those figures may be slightly larger now.

  • Agency fees
    These are fees and charges exacted by an international or domestic adoption agency, and they can vary drastically. Adoption agencies often charge between $5,000 and $40,000 or more for their services.

  • Background checks
    You'll typically need to pay for a government background check before your adoption can proceed.

  • Costs associated with the birth mother
    In some cases, you may need to pay for some costs that improve the birth mother's level of comfort or lifestyle as she prepares to deliver. The mother's medical costs can also be paid by the adoptive parents.

  • Court documentation preparation
    It can cost between $2,000 and $6,000 to have your adoption paperwork completed through a lawyer's office (If you work with an adoption agency, these fees are generally included in its charges.)

  • Legal fees
    Miscellaneous legal fees can cost $4,000 or more, depending on the type of adoption and the paperwork required to finalize it, according to the Child Welfare Information Gateway.

Also be prepared for a few hundred dollars' worth of nickel-and-dime fees, says Lepley. These costs will likely be small, but they do add up ($50 for paperwork filing fees, $15 for a new birth certificate, $40 to check if the birth mother has any official connection to a birth father through the putative father registry, and so on).

Travel Costs

In addition to fees associated with the adoption itself, Lepley says many people are surprised by how much adoption-related travel actually costs. For those who adopt a child overseas, this travel can easily cost thousands of dollars. For domestic adoptions that are closer to home, the cost of traveling to pick up your child can vary drastically.

While you may only need to travel a few states away, you might need to stay in a hotel for several weeks while the adoption is finalized. Extended hotel stays often result in paying more than you normally would for food, laundry and entertainment.

Preparing for the Cost of Raising a Child

Child-related costs can vary a lot depending on the type of supplies you already own, the age of the child you need to adopt and your child's special needs. Some costs you may need to plan for include:

  • Outfitting your new child's room with furniture, including a crib or a twin bed, a dresser, and a nightstand
  • Buying a wardrobe for your child
  • A car seat, if applicable
  • Baby-proofing and safety supplies
  • A stroller or bouncer
  • The costs of childcare or school for your child
  • Special foods for your child's unique dietary needs
  • Bottles and formula
  • Counseling for a child as he or she emerges from the foster care system
  • Adding your child to your health care plan
  • Ongoing healthcare costs for a child with a health condition or special needs

While these costs will vary depending on the type of adoption you pursue and the individual child you bring home, it's always best to plan ahead.

How to Save Money on Adoption

While the costs listed above are likely overwhelming, it's important to realize that some of them won't even apply to your situation. There are also many ways to save money throughout the adoption process if you're willing to put in some extra work and consider adoption alternatives. Here are some practical tips that can help you minimize costs along the way:

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    Consider adopting through the foster care system

    If domestic or international private agency adoption is too expensive for you to consider, give serious thought to adopting through the U.S. foster care system. Not only can you adopt a child for very little out-of-pocket cost, but you'll give children a second chance at having the loving and secure home they deserve.

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    Document all adoption costs in order to secure the maximum tax credit

    "If you are starting the adoption process, be sure to save your receipts for all adoption expenses," Lepley says. "Even if you are not eligible for the credit the current tax year, you can potentially claim leftover credits for up to five years." To document all costs associated with the adoption process, keep all receipts and write them down in a notebook or computer where you document each out-of-pocket cost.

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    Start an adoption savings account early

    If you plan to adopt in the near future, it helps to start stashing money away early. Start by setting aside a monthly amount in an adoption savings account, or use part of your savings to open a new account just for adoption expenses. Lepley's firm suggests starting with at least $2,000 to $5,000 while planning for the ongoing costs you'll face.

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    Consider a low-interest loan

    Some people have used credit cards and personal loans to help finance their adoptions. Some couples have also crowdfunded the cost of their adoption, although this fundraising practice has drawn criticism in some quarters.

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    Look for store discounts on clothes and supplies

    No matter the type of adoption you pursue and the age of your child, you don't have to pay full retail for all their clothing and gear. For example, if you are adopting a baby, your friends who have had babies can pass on all sorts of gently used baby clothes (just avoid anything with drawstrings, toggles, or sewn-on buttons). Consumer Reports and the Juvenile Products Manufacturers Association also recommend that you avoid used strollers, car seats, toys, and cribs because so many have been recalled for safety hazards.

Financial Assistance for Adoption

With adoption being such a large financial undertaking, there is no reason to go it alone. Any family considering adoption should check out the following resources with the goal of reducing their out-of-pocket costs:

Government Adoption Subsidy

Adopting a child with special needs from foster care may help you qualify for a government adoption subsidy, or monthly stipend, to lessen the financial burden on your family. According to the North American Council on Adoptable Children (NACAC), families can apply for federal Title IV-E assistance or state assistance, but not both.

Families who qualify for federal Title IV-E assistance can receive monthly maintenance payments, financial help with medical care, assistance with one-time adoption fees and expenses, and help with other services that vary depending on the child and their special needs.

Since state adoption subsidies are determined by the state where the child resides, the variables to consider are much greater. The North American Council on Adoptable Children offers a database of the different state requirements and subsidy profiles. It's important to note that state adoption subsidy policies are, for the most part, dependent on the state where the special needs child was in foster care before adoption.

Federal Tax Credits

For 2019, the federal adoption tax credit is $14,080 per child. This credit does phase out at higher income levels of around $200,000, however.

According to the Internal Revenue Service, tax benefits for adoption include "both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance." Qualified adoption expenses include:

  • Reasonable and necessary adoption fees
  • Court costs and attorney fees
  • Traveling expenses (including amounts spent for meals and lodging while away from home)
  • Other expenses that are directly related to and for the principal purpose of the legal adoption of an eligible child

Because an adoption process can span more than a single tax year, it's important to know how and when you can apply for this credit. According to the IRS, the tax year for which you can claim the credit depends on:

  • When the expenses are paid
  • Whether it is a domestic adoption or a foreign adoption
  • When, if ever, the adoption was finalized

For a domestic adoption, qualified expenses paid before the year the adoption becomes final are allowable as a credit for the tax year following the year of payment, and that's true even if the adoption was never finalized. For an international adoption, however, qualified expenses paid before and during the year are allowable as a credit for the year when the adoption becomes final.

Loans and Grants

  • HelpUsAdopt.org
    Built on donations from private donors, HelpUsAdopt.org offers a range of grant opportunities that can reduce the cost of adoption for families. Grants up to $15,000 are available.

  • ABBA Fund
    The ABBA Fund offers interest-free loans that can help with adoption for Christian families.

  • Brittany's Hope
    As a non-profit dedicated to helping abandoned children around the world, Brittany's Hope offers grants to help lessen the financial burden of adoption.

  • Gift of Adoption Fund
    Gift of Adoption Fund offers grants between $1,000 and $10,000 to adoptive families who can demonstrate a financial need.

  • His Kids Too!
    Apply for grants and receive fundraising dollars gathered for adoption expenses.

  • Home for Good Foundation
    This nonprofit foundation offers resources, loans, grants and matching funds to help with the financial costs of adoption.

  • World Association for Children and Parents
    This foundation offers loans, grants, and resources to parents hoping to adopt through their organization.

  • International Adoption Grant Program
    Offered through AChildWaits.org, the International Adoption Grant program offers up to $7,000 in grant money for adoptive parents who meet their criteria.

  • International Adoption Loan Program
    AChildWaits.org offers low interest loans to families applying for an international adoption. Loan amounts vary, but the annual percentage rate is typically fixed at 3 percent.

  • National Adoption Foundation
    The National Adoption Foundation issues grants of up to $2,000 and low interest loans to families hoping to adopt.

  • Lifesong for Orphans
    Lifesong for Orphans offers matching grants of up to $5,000 in addition to low interest loans.

Employer Benefits

It isn't always advertised, but many progressive employers offer adoption benefits to their employees. (Many offer these benefits only to full-time employees.) Depending on the scope and size of the program these benefits can range from a few thousand dollars to covering the full cost of your adoption.

The nonprofit Dave Thomas Foundation for Adoption offers a yearly round-up of the 100 most adoption-friendly companies in the country. On average, employers offered $9,000 in adoption assistance and six weeks of paid leave. And some provided far more:

  • Wendy's Restaurants has offered up to $25,300 in financial assistance and six weeks of paid leave for employees who adopt domestically or internationally.
  • Ferring Pharmaceuticals, out of Parsippany, N.J., has offered an adoption benefit worth up to $25,000.
  • Citizens Financial Group of Providence, R.I., has given up to $22,970 in assistance for full-time employees.

You can find out whether your employer offers adoption benefits by checking with your human resources department.

Adopting in Special Situations

Different types of adoptions have their own set of hurdles- and of course, a unique set of costs. Here are some different costs and scenarios you might want to consider.

ADOPTING CHILDREN FROM FOSTER CARE

Because children in foster care have often come from families in distress, you could face a number of challenges if you choose to adopt through the foster care system. Common problems to overcome include contact with birth parents who may be difficult to work with, the lasting effects of abuse, childhood exposure to drugs and alcohol, and emotional problems that require counseling or medication.

Some states offer resources that can help prepare you to overcome these issues. For example, the state government of Indiana offers information on legal issues that can arise from adopting a child through the foster care system, attachment issues some children have after spending years in and out of foster care, and the wide range of services that are available to families after the adoption takes place.

Meanwhile, the North American Council on Adoptable Children offers information on the different types of financial assistance available to adoptive families who choose to go through the foster care system. The Child Welfare Information Gateway also offers resources that describe the financial assistance you may receive, whether it's from state or federal funding sources.

LGBTQ INDIVIDUALS/COUPLES ADOPTING CHILDREN

By and large, gay and lesbian individuals and couples have had great success adopting through the many progressive adoption agencies located throughout the nation but have struggled to adopt through government-controlled services such as the U.S. foster care system.

The U.S. Supreme Court decision to legalize gay marriage has helped the cause tremendously by mandating second-parent rights nationwide. However, some states had already passed legislation that made it legal for contractors that oversee adoptions to refuse gay-parent adoption if it conflicted with their religious beliefs. The vast majority of states that had passed such legislation — Georgia, Kentucky, Louisiana, Missouri, Ohio, South Dakota, and others - have since updated their laws to reflect the legality of gay marriage.

Since adoption laws for gay and lesbian individuals and couples vary greatly depending on the state where you live, it's crucial to understand your rights and limitations. With gay marriage now legalized by the federal government, new options and opportunities for gay adoptive parents should make their way into the mainstream. Gay and lesbian couples and individuals have also adopted children internationally. Adoption policies on same-sex couples differ from country to country, though, so talk with your adoption agency about the best way to proceed.

INTERNATIONAL ADOPTION

International adoption is a lot like domestic adoption on steroids. Not only do you have to deal with the requirements for traditional adoption, but you must also navigate adoption requirements and costs imposed by your child's home country.

The U.S. Bureau of Consular Affairs lists the eligibility requirements for someone bringing a child home to the United States from specific countries. While the requirements for adoptive parents in the U.S. are the same for both domestic and international adoptions, the requirements for countries of origin vary greatly. After browsing through various countries, you'll find that some countries don't allow adoption to the United States at all, where others have requirements that range from encouraging to restrictive (some require you to be married for three years, for example, or to have a body mass index under 40). Still others make the process fairly simple albeit expensive.

The main difficulties you'll face with international adoption are larger demands on your money and time. Not only does international adoption typically take longer - sometimes it takes several years to finalize — but the financial costs can surge due to travel. The best thing you can do as a potential adoptive parent of an international child is to gain a working knowledge of costs to expect so you'll be in the best position to manage them.

ADOPTING CHILDREN WITH SPECIAL NEEDS

In the adoption services world, "special needs" refers to children who are more challenging to place for adoption.

Adopting children with special needs can be an exceptionally rewarding experience. Not only does it give you the opportunity to give a child a "forever family," but you'll feel good about the additional resources and care you can provide them.

Special needs can be defined to include a variety of circumstances, particularly mental, physical, and emotional conditions. Children with fetal alcohol syndrome, for example, have a developmental disorder that their adoptive parents need to be prepared to accommodate. Autism is also a fairly common condition that adoptive parents can help their adopted child manage through professional care and at-home support. In addition to the conditions above, however, some states also consider a child's age, ethnic background, and sibling group status to all be factors in determining special needs

If your child has a disability or a medical condition, you should strive to make their transition as seamless as possible by going above and beyond to prepare your home for his or her arrival. If a disability they have requires certain accessibility features, it's wise to incorporate them before you bring your child home. Likewise, children who need special medications or at-home care can benefit from new parents who already have an understanding of their normal routine. Knowing your child's medical routine is also crucial when you adopt a special needs child.

When you adopt a child with special needs, you may qualify for state or federal subsidies that can reduce the financial burden. The NACAC details the requirements and benefits of federal adoption subsidies, along with a list of state subsidies. While these subsidies may not cover the full cost of adopting a special needs child, the monthly payments and medical care provided can cover some of your largest expenses.

Expert Q&A

To learn more about the financial costs of adoption, we spoke to Nicole Witt, executive director of the Adoption Consultancy, and Jeremy Resmer, adoptive parent and co-founder of Fund Your Adoption, a website that helps connect adoptive parents with financial resources.

Why are some adoptions much more expensive than others?

Jeremy Resmer:

Agency, independent, and international adoptions are so expensive because the U.S. government does not subsidize them. Families are responsible for paying all adoption-related expenses for social workers, home studies, counseling, legal fees, post-adoption services, and so on.

Do you have to be "rich" to adopt a child?

Jeremy Resmer:

It's a common myth that you have to earn a lot of money to adopt. This simply isn't true. Families of all income levels adopt. The amount of money you earn is far less important than how you manage it. During the home study process, you provide detailed financial information and are evaluated based on your net worth, income, and cash flow. How you save, invest, and spend is more important than simply how much you earn.

How does adopting a child affect my taxes?

Nicole Witt:

There is a $14,080 tax credit for which families can apply after adopting. As a tax credit (rather than a tax deduction) it can put $14,080 back in their pockets as long as they are below certain income limits. The Adoption Tax Credit is complicated and it changes most years, so it's important to work with a tax professional who has experience with it.

Do you recommend having a savings account set aside before starting the adoption process? If so, how much should be in it?

Nicole Witt:

At the time that you sign up with your adoption agency, you'll need to show proof of funds. They want to be sure that you have the money available to pursue an adoption even if a situation comes up the next day with a baby that has already been born. But that doesn't mean that you have to have all the money put aside into a separate account. They just want to see that you can get it quickly if needed. So even showing the money from your 401K account or from a family member's account (who is loaning you the money) would suffice.

How should families prepare to adopt a child with special needs?

Jeremy Resmer:

Most people pursuing domestic adoption do not have a home study that approves them to adopt a special needs child, so they may not be legally allowed to move forward if the baby is unexpectedly born with special needs. However, assuming that they had an addendum done to their home study and moved forward anyway, the additional costs would depend on the severity of the needs and the family's insurance coverage. On the flip side, families who adopt a child with special needs out of the foster care system often receive stipends to help cover additional cost.

Resources

About the Author


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Holly Johnson is the co-founder of Club Thrifty, co-author of the book Zero Down Your Debt, and is recognized as one of the top credit card experts in the field. She is also a financial expert and award-winning writer who has traveled to over 40 countries and counting.

Holly's work has been featured in publications like The Wall Street Journal, CNN, and Fox Business. She is also a regular contributor to publications that include Business Insider, Bankrate, Money.com, LendingTree, U.S. News and World Report Travel, CreditCards.com, and more.