Carla and Bob finalized an adoption in 2016. Their adoption fees totaled $9,500. They have AGI of $207,920 for 2016. What is their adoption credit?

Question

Quizplus · Accepted Answer

The maximum adoption credit for 2016 is $13,460. However, the credit is subject to a phase-out based on AGI. Since Carla and Bob’s AGI is above $201,920, the credit is reduced by 2% of the excess over the threshold. The excess is $6,000 ($207,920 - $201,920), so the credit is reduced by $120 ($6,000 x 0.02). The final credit is $9,500 - $120 = $8,077.

Carla and Bob Finalized an Adoption in 2016