Does Adoption Subsidy Count as Income?

Financial
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Adoption subsidy, also known as adoption assistance, is a state or federally funded program that may provide monthly maintenance payments, medical assistance, and other support until the child turns 18 or 21. Adoption subsidy payments will vary depending on the needs of the child. It may also provide reimbursement for particular one-time adoption costs.

The purpose of the adoption subsidy is to assist adoptive families who have adopted a child who was hard to place due to physical, mental, or developmental needs. Such children are more likely to need costly counseling, therapies, medical equipment, or other special needs.

Adoption subsidy is not taxable by the IRS, but each assistance program is different, and many will count as income. One instance when the adoption subsidy would count as income is when filing for bankruptcy. You may be eligible for other benefits. The child tax credit is in addition to the adoption tax credit, the credit for child and dependent care expenses, and the earned income tax credit.

The North American Council on Adoptable Children (NACAC) provides an Adoption Subsidy Resource Center to help adoptive and prospective parents find benefits available to children adopted from foster care. The resource is funded in large part by the Dave Thomas Foundation for Adoption. It features such information as eligibility requirements, how to make changes to your adoption benefits, and how to handle special circumstances. The website also offers sources of other assistance programs to helps with college expenses for older children and teaches which adoption assistance programs affect government assistance programs for families.

NACAC is also a resource to inform and inspire policymakers working to improve outcomes for children and families. We also ensure that the voices of those most affected by policies and practices—the youth and parents touched by the system—are seen and heard during child welfare reform.

 

 

Ashley Foster is a freelance writer. She is a wife and mother of two currently residing in Florida. She loves taking trips to the beach with her husband and sons. As an infant, she was placed with a couple in a closed adoption. Ashley was raised with two sisters who were also adopted. In 2016, she was reunited with her biological family. She advocates for adoptees’ rights and DNA testing for those who are searching for family. Above all, she is thankful that she was given life. You can read her blog at http://ashleysfoster.blogspot.com/.


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