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Originally Posted By Lana

I read a post earlier on where a family was adopting 3 children from Guatemala and wondered how the tax credit would work for them. Nobody answered and since we are intending to adopt more than one child also, I really need an answer. An agency had told me that the tax credit was per child. Can anybody verify this for me? Thanks so much.

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Originally Posted By chieffan9

Lana,
I'm sure that the tax credit is per child, rather than per year. The problem you may run into, however, when you adopt multiple children is being able to get the entire credit back in the alotted time of only 5 years. I do NOT believe that because you are adopting two or more children, that the time alotted is extended. If you are adopting 2 or more children, and your income is not very high, you may run into a problem with not paying enough income taxes every year to take the credit against within the 5 years.

Example, if you are adopting two children, you get a $20,000 credit that you have to take within 5 years. That means that you have to pay at least $4,000 per year in federal income taxes to be able to take full advantage of the entire credit. What your tax bill is every year is dependent on several things, but the most important is your income level. If your income is less than $50K per year, you probably won't be able to take full advantage. Even if it is over $50K, you still might have trouble. Remember, once you get the children, your tax bill will be reduced because you can claim them as dependents which lowers your AGI, and then you get another $500 per child tax credit on top of that. So, at the very least, your tax bill will be reduced by $1,000 right off the bat because you have the two children.

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Originally Posted By twins?

Does anyone know if twins would count as 1 adoption or 2?

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Originally Posted By chieffan9

For tax credit purposes, it is per child. So, twins would count as two adoptions.