Pennsylvania Adoption Subsidies and Tax Credits

In 2015, more than 11,000 children in Pennsylvania entered the foster care system. Most of these children will end up bouncing between foster homes for years, but a lucky few—20% according to statistics released by Child Trend—end up being adopted. If you’re thinking of adopting a foster child, a PA adoption attorney can explain if you’re eligible for state/federal subsidies and tax credits.

Adoption Assistance Programs

Adoption assistance programs in the Keystone State are designed to offset expenses associated with the adoption of a special-needs child from foster care. In order to be designated with special needs, the child must meet at least one of the following criteria:

• Be diagnosed with a physical, mental or emotional disability
• Have a genetic profile that’s associated with a high probability of developing a disability
• Be between the ages of 5 and 18
• Be a racial or ethnic minority

Siblings who are placed in the same adoptive home may also qualify for the reimbursement of adoption expenses.

Adoption assistance programs are designed to cover one-time expenses such as necessary medical and psychological examinations, transportation, lodging and food. Reimbursement for these expenses is capped at $2,000 per child. Families who are eligible for this assistance may also be eligible for state-sponsored medical coverage for the child they’re adopting as well as for a monthly adoption subsidy to cover the child’s expenses.

Federal Adoption Subsidy Programs

Title IV-E is the federal adoption subsidy program. It can be used to cover basic room, board, care and supervision costs associated with child rearing. In addition, the funds may be used to offset costs that are not quite as routine, such as diapers for children older than 4 years of age, school supplies and the cost of day camp. The amount of this subsidy will never exceed the highest amount that prospective parents might receive from fostering the child. However, the amount of the subsidy can be renegotiated if the child’s needs increase over time.

To qualify, the child must meet the eligibility criteria for the Pennsylvania-sponsored adoption assistance program. Additionally, the state of Pennsylvania must first determine that circumstances are such that the child should not be returned to his or her parents. The state will then make a reasonable attempt to place the child in a situation where the adoptive parents do not require government-subsidized support. Medicaid benefits are automatically awarded to children who qualify for Title IV-E funding.

If these criteria are met, then a child can qualify for Title IV-E funding in one of five ways:

• The birth family met income and eligibility guidelines for the now-defunct Aid to Families of Dependent Children program (AFDC) in the month during which the child was surrendered to the foster care system. The criteria for AFDC eligibility hinged on the inability of the parents to support the child either through parental absence from the home, parental disability or unemployment.
• The child with special needs was in the foster care system for 60 consecutive months or longer.
• The child is eligible for Title XVI Supplemental Security Income (SSI) benefits. SSI is most often reserved for children with physical disabilities.
• The child was born to a minor parent who is in the foster care system.
• The child was deemed eligible for Title IV-E funding through a previous adoption, but that adoption is no longer legitimate.

At one time, Title IV-E funding also had age guidelines. As of 2018, however, children of all ages may be eligible.

Tax Credit for Adoption

There is also a one-time tax credit that adopting parents can claim on their federal tax returns that’s designed to help with expenses associated with the adoption. It’s a nonrefundable credit, which means that it can only be used to lower any existing tax liability. If you’re adopting a special-needs child, you may be able to write off as much as $13,810 in qualified adoption expenses.

While adopting a child with special needs may be complicated, it can also be rewarding. A PA adoption attorney will be able to help you determine if you might be eligible for federal and/or state payments that can help you deal with some of the associated expenses. Contact the law firm of Cofsky & Zeidman in Philadelphia at (215) 563-2150 to set up a consultation today.