Parents can receive payments from the the Federal government under the Federal Title IV-E adoption assistance program. To qualify, the eligible child with special needs can take the form of either one-time (nonrecurring) adoption assistance or ongoing (recurring) adoption assistance. These funds are paid through the State agency or through another public or nonprofit private agency and are available for children being adopted from foster care.
There are 2 kinds of assistance under this program:
Nonrecurring Adoption Assistance. The parents will be paid or reimbursed for one-time reasonable and necessary expenses directly related to the legal adoption of a child with special needs that have not been reimbursed from other sources or funds. These reimbursable expenses may include the home study fees, attorney fees, replacement of the birth certificate, and travel for visits to the child (including mileage, lodging, and meals). The Federal maximum for this type of assistance is $2,000 for each adoptive placement. However, Some expenses in excess of this amount may be tax deductible.
The 2nd is the Recurring Adoption Assistance. It provides funds that may be used for any identifiable need of the child. These usually take the form of monthly payments to the parents of eligible children. The maximum payment amount may not exceed the amount that would have been paid for maintenance if the child had remained in a foster home in that State. Payments can continue until the child reaches age 18 (or until age 21 where the State determines that the child has a physical, mental, or emotional disability), and these payments continue even if the family moves to another State. While adoption assistance is not taxable, portions could be taxed if the family cannot prove that the amount spent on the child’s support was more than the amount of assistance received. Families are advised to consult a tax professional.
Source: Child Welfare Information Gateway