Carla and Bob finalized an adoption in 2015. Their adoption fees totaled $9,500. They have AGI of $207,000 for 2015. What is their adoption credit?

Question

Quizplus · Accepted Answer

The maximum adoption credit for 2015 is $13,400 per child. However, the credit phases out for taxpayers with AGI between $201,010 and $241,010. Since Carla and Bob's AGI is $207,000, they are subject to a phase-out. To calculate their credit, we need to subtract their AGI from $241,010 and divide the result by $40,000 (the phase-out range). This gives us a phase-out percentage of 1.475%. We then multiply the adoption fees by this percentage to find their credit: $9,500 x 1.475% = $140.13. However, the credit cannot exceed their tax liability, so their credit is limited to $9,500 - $140.13 = $8,077.87. Therefore, the best answer is B.

Carla and Bob Finalized an Adoption in 2015