Chad and Jaqueline are married and have AGI of $150,000.In 2019 they adopted a child,while taking advantage of their employer's written adoption assistance program.The adoption cost $9,500,all of which was paid by the employer in accordance with the adoption plan.How much of the employer-paid adoption costs may be excluded from their income?
A)$0
B)$5,000
C)$5,250
D)$9,500

Question

Quizplus · Accepted Answer

According to IRS rules, taxpayers can exclude up to $14,080 of employer-provided adoption assistance from their income in 2019. However, the exclusion is subject to a phase-out for taxpayers with higher incomes. In this case, Chad and Jaqueline have AGI of $150,000, which falls within the phase-out range. The phase-out range for 2019 is between $211,160 and $251,160. To calculate the amount of the exclusion, we need to use the formula: $14,080 - ($150,000 - $211,160) x 0.05. Plugging in the numbers, we get an exclusion of $9,500. Therefore, the correct answer is D, which represents the full amount of the employer-paid adoption costs that can be excluded from their income.

Chad and Jaqueline Are Married and Have AGI of $150,000