Rolando and Silvia have modified AGI of $230,000.They adopted a boy from Guatemala,whose adoption became final in the current year.They incurred a total of $15,000 in qualified adoption expenses.What is the amount of adoption credit they can claim in the current year?

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Quizplus · Accepted Answer

The adoption credit is subject to a phase-out (or reduction) based on the taxpayer's modified adjusted gross income (MAGI). For taxpayers with MAGI above certain thresholds, the amount of the credit begins to phase out and is completely phased out for taxpayers with MAGI above a higher threshold. Given that Rolando and Silvia have a MAGI of $230,000, they fall within the phase-out range for the adoption credit in the current tax year. The maximum credit amount for the year is adjusted for inflation, but their income level reduces the amount they can claim. The correct amount, $4,593, reflects the reduced credit they are eligible for after the phase-out is applied.

Rolando and Silvia Have Modified AGI of $230,000