Adoption Tax Credit Equals Welfare?!?

Dawn Davenport



The adoption tax credit is a way to promote adoption and make it feasible for lower income families, but some people have it confused with welfare.

CNN Money ran an article a couple of weeks ago on the Adoption Tax Credit and the delays many families are experiencing receiving credit.  Now, you might imagine that the readers of CNN Money would be the thoughtful, staid type. Heck, CNN Money is even backed by Fortune and Money magazine—the very bastions of thoughtful staidness. Right?  Based on some of the responses concerning the adoption tax credit, I’m not so sure.  Many readers equated this refundable credit to welfare.

What is the Adoption Tax Credit?

I won’t bore you with too many details on the adoption tax credit since I’ve posted on this credit ad nauseam (here and here), and we have extensive resources at  Creating a Family on the this credit, but let me give you just a bit of history to put these comments in context.  The adoption tax credit allows adoptive parents to claim as much as $13,170 per child to cover some of the cost of adoption.  In the past this has been a “standard” tax credit which lowered the amount of taxes the adoptive parent owed.  In 2010 for the first time, this tax credit became refundable, meaning the government cuts a check to the adoptive parents in the amount of the credit rather than applying the credit to reduce the amount of taxes owed.  This is especially helpful for lower income families because they get the money even if they don’t owe any taxes.  Families adopting a child with special needs (which would include most adoptions from foster care) are eligible for the entire credit, even if cost them nothing to adopt.

What do people think?

Herewith are some of the comments by the erudite and sophisticated readers of CNN Money:

  • MikeDUtah: This is not a “refund” but a redistribution; taking from some to give to others. It is no different than a welfare check.
  • MrJD: Many people pay nothing in and get money out. The tax code has become a means of paying stealth welfare.
  • tuntin,.Stupid using kids to make money….
  • And, what I consider the pièce de ré·sis·tance of ignorant comments Arbutus: What a crock!!! Get paid to adopt kids, then get on the government dole so you can sit around and have them wait on you like little slaves. Get a free house and a lifelong slob job. It’s an even better deal if you score special needs kids and get paid by the government to take them home and ignore them. It’s one thing to get a tax credit on earned income, it’s another thing completely to get welfare from the IRS.

Tax benefits are a way for the government to redistribute income.

Oh my, where to begin.  Lawmakers, for better or for worse, have long used taxes to attempt to regulate human behavior. Take for example, home ownership. The powers that be way back in the 1950s decided that home ownership was good for people and good for our country.  Over the years, they’ve tried all sorts of tax benefits to encourage people to buy a home.  Home mortgage interest is deductible on your income taxes if you itemize. You can deduct the interest on home mortgage debt, even if it is for a vacation home. You can also deduct the interest on home equity debt, even if you don’t use the money for home improvements. Real estate taxes are deductible as well.  In 2008, in the midst of the Great Recession, Congress added a first-time homebuyer tax credit.

All tax benefits could be considered as a way to redistribute income. Granted, in the world of tax benefits, refundable tax credits are about as good as you get, but adoption is hardly the only refundable credit.  Consider the following:

  • earned income credit (to help low income working people)
  • child tax credit
  • American opportunity credit (for college expenses)
  • making work pay credit
  • health coverage credit

The adoption tax credit is not limited to adoptions from foster care, but many of the very large adoption tax credit refunds that are being highlighted by the media, including in the CNN Money article that the commenters were responding to, are for families that have adopted a number of children from foster care.  A family that adopts four children from foster care might be eligible for a credit of $52,800.

The Adoption Tax Credit is good for families and the government.

Looking at the tax credit strictly from a monetary standpoint, it offers a major cost savings to the government.  Each state is different, and the dollar amounts are hard to find, but the annual cost to support a child in foster care is about $25,000. Note that this in an annual cost.  If the child had not been adopted and continued to be supported by the government, the cost is much more. The one-time payment of $13,170 is a bargain!

Of all the many worthwhile socially valuable things our government could choose to encourage, I can’t think of a single thing more valuable than adoption.  Every shred of research supports the idea that children need permanent caring families in order to grow into healthy productive members of our society….to say nothing of growing into mentally healthy, reasonably happy adults.  Adoption is in our country’s best interest, in the family’s best interest, but especially in the child’s best interest.

As to the comment by the mental giant Arbutus, I don’t know what planet he’s/she’s living on, but if he’s found the secret to getting kids to wait on you like a slave, I wish he’d share it with me.  You wouldn’t believe the eye rolling and complaining that goes on in my house when a child is asked to clean the bathtub or wipe down the kitchen counters.

Image credit:  thebrooklinelibrary

21/06/2011 | by Dawn Davenport | Categories: Adoption, Adoption Blog, Blog | 34 Comments

34 Responses to Adoption Tax Credit Equals Welfare?!?

  1. Avatar Geri Weaver says:

    Karoline, I have to say, I agree with you. We adopted internationally, twice, and paid more than double what this refund/credit is offering. Our first son went through therapies for RAD, which was not covered by any medical insurance. I was not saying that the credit was not necessary, but rather, I am wondering how, when you need to show receipts and documentation for the credit, how the foster-to-adopt slips through under this credit. That was my pondering and perplexment. I have friends who did international adoptions within the last 2 years that are still waiting for their refund/credit. The whole thing has me shaking my head.

  2. Avatar Tera Teresa Billes says:

    People play an angle to get readership. I wouldn’t even waste my time worrying about this. The tax credit is there as an incentive to get people to adopt foster children. I have no idea why they offer it to other people adopting overseas, but maybe because they want to have a more intercultural country? I am unsure of the motivation of the government – there is no reason I can see to give a tax credit for international adoption. Maybe I’m not seeing the whole picture? But like I said, I’ve also got nothing against providing one either.

  3. Avatar Chrissy Holden Masciangelo says:

    enraged at the comments in the article.

  4. Avatar Maureen Pettry Centa says:

    Wow! If they even have a clue om what it takes to raise a chikd from foster care. And “scoring” a special needs child. Omg how ignorant. They need to come and spend one day with me. I have not recieved my return yet, but most of the return is going to make bedrooms for my kids because of their speciL needs they need seperate rooms. These are the same people who would never even consider fostering or adopting and that think all foster kids are bad. I may not have “paid” for my kids, but the cost of raising is way over our monthly subsidy and way morw then this tax credit

  5. Avatar tammy says:

    Yes, there are some people who exploit children for money, babysitting their other children and yes even maid service. I witnessed this firsthand by my brother and sister in law. This girl was treated well on the outside, but was ridiculed, put down and used like a servant not to mention my brother in law was sexually abusing her and now blames her because she had so many “problems”. I am all for adoption, but please remember not everyone is doing this out of the kindness of their hearts and in this economy we may see more abuse and exploitation of the weak and innocent than ever. These people also had ministers license at the time.

  6. Avatar Jen says:

    I can’t believe the level of ignorance in those comments. I think the US has done a wonderful thing in offering these tax credits and wish my own country (Canada) would do the same.

    ICLW #144

  7. Avatar Essie says:

    I just saw your blog post so I am a little late with my comment. We adopted an older child, and to do so we took out equity on our house. Our house has since fallen apart and though we were assured we would recoup the money by our adoption agency as a tax break that is not what happened. I am so grateful for a second chance to get some of that promised money back. Our daughter is worth far more than a house, but we do have to live somewhere!

  8. Avatar Pix says:

    Great post! Excellent retrospective on a topic that just burns my hide! I am so shocked at the amount of vehemence on this topic. And Sarah, I totally agree with you.

  9. Avatar Kristin says:

    What a bunch of total asshats. I’m infuriated by those commentors.

    ICLW #10

  10. Avatar Loving mother says:

    Dnt matter what type of adoption you have or how much money spent we al did
    This out of LOVE for the childern if they didn’t make this money refundable we all
    would be in need of help so I say thank god they offered it and be happyif we get it

  11. Avatar Sarah says:

    Tara, my guess is that they refund for international adoptions because there is a need. It isn’t all about reducing our local “liabilities” (kids in foster care). Also, isn’t it illegal to discriminate in govt based on national origin? I’m sure you meant well, but it didn’t feel so good to be questioned about worthiness to recieve the tax refund – we adopted internationally and we consider ourselves part of the adoption community right there with domestic adopters. International adoption is generally more expensive than domestic.

  12. Avatar St. Elsewhere says:

    Extremely insensitive and irresponsible and very irrational comments, really. In fact, it seems they are completely out of touch with reality, are very fertile and surrounded by nothing but fertile people.

    iclw #36

    • Avatar Dawn says:

      St. Elsewhere, yeah, you and I both know that they are not surrounded by nothing but fertile people since we know how common infertility is. More likely they are surrounded by the same amount of infertility as the rest of us, but no one wants to let them know since they would likely be as insensitive about infertility as they were about adoption.

  13. Avatar Lain says:

    Makeing Money?!? Yes, because we all know that adopted kids don’t eat, don’t drink, don’t go to the doctors, don’t need school supplies, and don’t grow out of clothing. *Rolls eyes*. These are the same small minded and even small hearted folks, who think you are stupid for adopting “somebody else’s problem”.

  14. Avatar Deb says:

    Rude comments!
    I think the credit was helpful to many families, I was upset though that we could not be refunded any of the money we had spent to adopt our two children, we just missed the cut off by a few mons.

  15. Avatar Ray says:

    I actually remember reading the comments on that CNN news piece. What actually shocked me was the massive amount of commentary about how people were adopting to make money. If I remember correctly, the people showcased in the article wouldn’t have even known about the adoption credit at the time of the adoption. In many cases the large “windfalls” of money was related to adoption credit rollovers from previous years.

    But, here in Oklahoma I hear a lot of similiar chatter because we constantly hear stories on the news of foster kids being found locked in closets, used as indentured servants or even in one case were there were adopted kids kept chained up and it wasn’t discovered until one of them escaped and was found sleeping in a dumpster at a local fast food establishment (the dumpster was better than where he escaped from)

    People seem to like to focus on these high profile sensationalized media stories and not realize that these scum represent a fraction of a percent of the foster and adoptive parents

    • Avatar Dawn says:

      Ray, I too was a little surprised by the “adopting for money” theme of many of the comments. Unless you seriously neglect your children, it’s hard to make money off of parenting, even if your child qualifies for monthly subsidies.

  16. Avatar Heather says:

    It is way too easy to hide behind the Internet. These comments are as bad as the ones the NYT usually garners. ARGH!

    • Avatar Dawn says:

      Heather, you make a good point about the Internet. From an education standpoint, it is unsurpassed, but people can hide behind the anonymous nature of it and say things that they would never say in person.

  17. Avatar Geri says:

    Personally, I think the whole “tax break” and spending system needs some sort of leash put on it. But, if I may, I’m looking at it from the other end of the argument. I have a girlfriend (single mother) who has adopted 5 children from foster care in the last 2 years. The last one is severely special needs, the other four are healthy. All of her SN daughter’s therapies are covered by Medicaid. She is eligible for WIC/food stamps and received a HUGE food supply from the state food bank every month. She was eligible for this tax refund for all 5 of these children? She was a stay-at-home mom, running a state daycare out of her home. She told the mom of these children that she was taking the summer off. So they are now living off of this income. She doesn’t have any plans for the fall. She could be one step closer to a welfare check, yes. Because she’s enjoying not having daycare children in the house. Her adoptions did not cost her anything, her daughter’s care is not costing her anything. So I’m not certain how I feel about the refund going to foster adoptions.

  18. Avatar Karoline says:

    This article has my blood boiling! We adopted privately and anyone who has done so knows this credit comes no where close to compensation. Not only that our daughter is “special needs”, and her medical bills alone are astronomical. Their needs to be far more opportunities for couples who can not conceive or wish to adopt, and far less comments made like the one’s in this story!

  19. Avatar Robyn says:

    I look at it this way: Birthing a child is tax deductible because health care costs are tax deductible. I think adoption costs should be tax deductible, but they’re not. Private and international adoption cost well over $13K. However, the $13K is at least something to help defray the huge up-front cost.

  20. Avatar Lindsey says:

    All I have to say is wow!! Those people are so full of themselves and what they think is the way the world is going. The tax credit for adoption is one of the greatest things the government could have done because, as soon as my husband and I are ready, we are going to adopt and that is what is going to allow us to afford to do so. Thank you for being so passionate!! And hi from ICLW!

  21. Avatar Jennifer says:

    what a bunch of nutcases. they obviously have no idea what adoption costs. they are probably the same bunch of idiots who tell everyone to just adopt, without any idea of how difficult it can be.


  22. Avatar MARIA says:

    It is a blessing and i accept it with gratitude.I love my adopted kids and would not change anything for the world. They are on their way to college and making me proud. To hell with what ignorant people think.

  23. Avatar chloe says:

    thanks for this post. the whole debate is so infuriating — especially since there are plenty of examples of unfair tax breaks (like the ones for millionaires and corporations) that should be put under a microscope.

  24. Avatar tam says:

    we are not “making money” we are not even “breaking even.” Iternational adoption is expensive, no matter which program, or agency you use. We adopted four kids from Ukraine, it was not a cheap and easy venture. While we can afford to absorb the long term costs of raising these kids(including paying for their medical conditions without government aid), recouping some of the costs of the actual adoption would go a long way. Many parents are counting on the refund to adopt again, thus saving more lives. Just how much is a life worth anyways? Is it only worthy if it is born in marriage to a heterosexual couple and doesn’t have any special needs? Just one 13K refundable credit could save another life. People who say things like “adopting kids to make money” have no idea the sacrifice that goes into it. Parents dont adopt to make money, in fact they will never recoup ALL of the costs of international adoption, they adopt to give a child a life.

  25. Avatar Jennifer says:

    “Using kids to make money”??? I did not “make money” by adopting. I spent a lot of money for the adoption and continue to do so to raise my child. The tax credit is a drop in the bucket compared to the cost of raising a child and putting that child through college.

    Also tell me these “commenters” don’t use credits and deductions of some kind on their own taxes….

  26. Avatar Vera Whittler says:

    Unbelievable- What angered me the most is when Arbutus (mensa material for sure)talked how we are getting paid to have children. So tired of ignorant people making comments about something they no nothing about – So sad and unfortunate

  27. Avatar Shelli says:

    Well said, Dawn. We were so thankful to know that we could recover some of our money from our adoption (x2)of the twins. It happened so quickly (3 wks.) we didn’t have time to save up for an adoption like we thought we would and had to borrow money to be able to keep them from going into foster care. We count the adoption tax credit as a real blessing and an answer to our prayers.

  28. Yeah, I thought that phrasing “scoring a special needs kid” was particularly choice.

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