Is adoption subsidy considered income for the parents of special needs adopted children? The answer is “YES” and “NO! Now how is that for a straight answer? Whether or not adoption subsidy should be included in your gross income depends on the specific situation. If you do not know what adoption subsidy is, read this article first. “What Is Adoption Subsidy, Who Gets It, How Much, and for How Long.” If you are not sure what special needs are, then read this list, "Adoption Abbreviations." In order to answer the question correctly we will consider specific situations and consider possible variances. If you have a specific scenario regarding adoption subsidy as income that is not covered please post your question as a comment. If you are not comfortable posting your question for all eyes to see email me privately at fostermommy. I will answer you privately or write another blog to address the question if more than one person asks it.

Is adoption subsidy income when computing your annual income tax return? Usually, no it is not taxable income. However, there are a few considerations here to consider for those parents receiving rates considerably above base room and board rates. In order to claim a child as your dependent you must provide more than half of the financial support for the child throughout the year. When you divide your income from other sources by the number of people in your family, it should exceed your adoption subsidy amount. If it does not, you may not be providing half the support for your special needs child.

Is adoption subsidy income when applying for loan? Yes, most financial institutions will accept documents verifying income from a state subsidy program. Just keep in mind that when the child turns 18 or 19 in most states, the income stops. However, with most teenagers, the expenses do not stop at that age.

Is adoption subsidy income when applying for free lunches, WIC, food stamps, or other forms of state aid? Yes, these applications clearly state, “All household income regardless of source.” However, keep in mind that WIC programs usually waive the income guidelines for children who have active Medicaid cards. If you adopted a special needs child under five, who is Title IVe eligible, then your child should receive WIC.

Photo Credit: Julia Fuller