Carla and Bob finalized an adoption in 2017.Their adoption fees totaled $9,500.They have AGI of $207,540 for 2017.What is their adoption credit?

Question

Quizplus · Accepted Answer

The adoption credit for 2017 is a maximum of $13,570 per child. However, the credit is phased out for taxpayers with AGI above $203,540 and completely phased out for AGI above $243,540. Since Carla and Bob's AGI is above the phase-out range, their adoption credit is reduced by 5% of the amount that their AGI exceeds $203,540.

Calculation: 
AGI = $207,540
Excess AGI = $207,540 - $203,540 = $4,000
Phase-out percentage = 5%
Reduction in credit = $4,000 x 5% = $200
Maximum credit = $13,570
Adoption fees = $9,500
Credit before reduction = $9,500
Credit after reduction = $9,500 - $200 = $9,300
Since the credit cannot exceed their total adoption fees, their adoption credit is $9,300.

Carla and Bob Finalized an Adoption in 2017