Question

Ann and Bill were on the list of a local adoption agency for several years, seeking to adopt a child. Finally, in 2017, good news comes their way, and an adoption seems imminent. They paid qualified adoption expenses of $3,300 in 2017 and $12,600 in 2018. Assume that the adoption becomes final in 2018. Ann and Bill always file a joint income tax return.

a. Determine the amount of the adoption expenses credit available to Ann and Bill, assuming that their combined annual income is $94,600.
$................

In which year(s) will they benefit from the credit? 2017? 2018? 2017 and 2018?

b. Assuming that Ann and Bill's modified AGI in 2017 and 2018 is $220,200, calculate the amount of the adoption expenses credit.

In your computations, do not round any division and do not round other calculations. Round the final answer to the nearest dollar.

The credit is $.................

Answer 1

1. The maximum amount (dollar limit) for 2018 is $13,810 per child.

In 2018 = 13810

2. (220000-207140)/40000= 0.3215

0.3215X 13810= 4439.92

The credit is 13810 - 4439.92 = 9370.08