Money Monday

By Dr. Barbara O’Neill

What should Personal Financial Management Program staff know about adoption to assist service members?

Children's Bureau CentennialWhen considering adoption, families must take into consideration the various expenses and requirements involved. These can seem even more daunting for military families who face permanent change of station (PCS) moves every few years. The Internal Revenue Service offers a nonrefundable tax credit for qualified adoption expenses up to a limit of $12,970 for each effort to adopt an eligible child (2013 figure). Nonrefundable means that if your tax bill is less than the amount of the credit, you will not get any additional money back from the IRS.

The credit amount is lowered by any qualified expenses taken for the same adoption in a previous tax year. This credit or exclusion can be used for expenses involved for each attempt at adopting. For military families, there is an additional reimbursement up to $2,000 per child or up to $5,000 per year for qualifying expenses for adoptions arranged by qualified adoption agencies. However, these benefits are not paid until the adoption is complete. For more information about the DoD Adoption Reimbursement Program, see the website of the National Military Family Association.

To qualify, service members must be serving on continuous active duty for at least 180 days and the adoption must be finalized while they are on active duty. In addition, the claim must be submitted while on active duty and within one year of the date that the adoption was finalized. Complete policies and procedures can be found in DOD Instruction 1341.9. To file a claim, the service member needs to complete DD Form 2675 along with supporting documents to be submitted to their installation personnel office.

Another challenge facing military families is leave policy. Although military service members are not eligible to take leave under the Family Medical Leave Act, they have another option. Service members are eligible to take up to 21 days of nonchargeable leave in conjunction with the adoption of a child. This allows a service member time to help the child adjust to his/her new surroundings. However, if both parents are in the military, only one can take adoption leave.

Finally, military families can check with their legal assistance office for advice on adoption proceedings even though they cannot provide representation. For information on the costs involved in adopting, check the Child Welfare Information Gateway.

Browse more military personal finance webinars and blog posts by experts here.

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This post was published on the Military Families Learning Network Blog on April 1, 2013.

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