In 2009, my husband and I had a failed placement when trying to adopt domestically. What that means is that, as the adoptive parents, we paid all of our legal fees once we were matched with an expectant mother up until the point of relinquishment. When the child's mother did not relinquish, our adoption was left uncompleted. We had spent approximately over $8,000 in legal fees with our lawyer (we were doing an independent adoption) as well as for our home study.
Starting over with adoption is difficult after having a failed placement. We knew we had to keep moving forward, but financially, it was difficult as well. At an adoption seminar we attended after our failed placement, we were told by a coordinator that 50% of domestic adoptions would fall through before relinquishment due to the child's parents changing their mind. We thought to ourselves......how many times would this happen? And if so, how could we keep moving forward financially with spent legal fees after each match?
Luckily, we found out that we could recoup some of the funds we had spent on legal fees from our tax refund that year. I often hear of adoptive parents in a similar situation we were in that did not know this was possible. I am no legal or finance expert for sure, but I wanted to make you aware of an option that might work for you as well. Also, with all the chances to the adoption tax refund in recent years, this option might not still be available or available for long for some families. I think it is worth looking into, although, for families who have had a failed placement and may be able to receive some or all of their expenses refunded.
The IRS Form 8839 has additional information about qualified adoption expenses. Read the section under the heading, "Attempted Adoption of US Children."
For more information about the adoption tax credit, see the IRS Adoption Benefits FAQ as well as the resources at Creating A Family.