Adopting a child will definitely affect your budget. But in many cases, financial assistance - including adoption subsidies and tax credits - can help offset some of your expenses.
Adoption subsidies (also called "adoption assistance payments") are available to families that adopt children with special needs. Subsidies don't cover all of the costs of raising a child, but they can help you handle the costs of certain expenses and services to meet the child's needs.
Benefits are determined on a case-by-case basis, and they may include monthly cash payments or medical assistance through Medicaid.
Subsidies are based on the needs of the child, not on the adopting family's income.
Most adoption subsidies are provided through the federal Title IV-E Adoption Assistance Program. In some cases, the state of Colorado provides subsidies for children who don't meet federal qualification requirements.
To help with the expenses of adopting a child, you may be eligible to receive an adoption tax credit.
For more information on the adoption tax credit, talk with your tax advisor. The IRS publication, "Tax Benefits for Adoption," is available online at www.irs.gov/forms_pubs/pubs/p968toc.htm or by calling 800-829-3676.