Jesus and Mindy have modified AGI of $210,000,adopted a girl from Miami,Florida,and incurred a total of $18,000 in qualified adoption expenses.What is the amount of adoption credit they can claim in the current year? (Do not round interim calculations)

Question

Quizplus · Accepted Answer

The adoption credit for 2020 is a maximum of $14,300 per child. Since Jesus and Mindy adopted one child, their credit would be limited to $14,300. However, the credit is also subject to a phase-out based on modified AGI. In 2020, the phase-out begins at $214,520 and is completely phased out at $254,520. Since their modified AGI is $210,000, they are within the phase-out range. To calculate the actual credit, you need to subtract their modified AGI from the top end of the phase-out range ($254,520) and divide the result by $1,000. This gives a reduction factor of 44.48%. So, the actual credit they can claim is $14,300 minus 44.48% of the excess over $214,520, which is ($210,000 - $214,520) x 44.48% = $11,378.

Jesus and Mindy Have Modified AGI of $210,000,adopted a Girl