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Adoption Costs Prospective parents may be concerned with the financial weight of adoption costs. Parenting on any level can be expensive, but adoption has a unique list of upfront costs that can be extraordinarily challenging. Thankfully there are a variety of options that can help parents offset the cost of adoption. Offset Adoption Costs with Tax Benefits Adoption costs can range from nothing to upwards of $40,000 and the costs tend to vary based on a multitude of factors. The type of adoption, the type of placement agency, as well as the circumstances of the adoption and a child's age all affect expenses. All adoptions can be expected to include home study costs and legal fees. Medical services as well as travel expenses (including meals and lodging) may also be incurred and are potentially reimbursable. The IRS allows a tax deduction to cover for adoption costs, but many of the above expenses can also be covered through employer-sponsored cafeteria benefits programs, such as those offered by take care. Through such programs, pre-tax dollars can be used to cover the costs of adoption. There is a limit to the total amount of money that can be contributed to such a plan for adoption costs, though. A tax credit of up to $11,6500 for 2008 can be taken to pay for qualified expenses. If you expect to pay more than $11,650 in 2008 for any one adoption attempt, you may be able to take both a credit when filing your taxes as well as an exclusion from your gross income, as would be taken under a cafeteria benefits plan program. While both may be used, you cannot claim both a credit and an exclusion for the same expenses. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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