Question

If Ann and Bill's modified AGI in 2017 and 2018 is $220,000, calculate the amount of the adoption expenses credit. In your computations, do not round any division. Round your final answer to the nearest dollar. Could you show the breakdown on how you get the answer.

The credit is? _________________

Answer 1

Solution: $8,067

Working:

The maximum adoption credit for 2017 is $13,570 for 2017 (up from $13,460 in 2016).

The credit amount which is otherwise available is phased out for taxpayers whose AGI (modified for such purpose) is more than $203,540 (up from $201,920 in 2016), and the credit is completely eliminated when AGI reaches $243,540 (up from $241,920 in 2016). i.e. $243,540 - $203,540 = $39,600

Thus, 13,570 - {13,570 * [(220,000 - 203,540) / 39,600]

13,570 - {13,570 * (16,460/39,600)}

13,570 - {13,570 * 0.405556}

13,570 - 5,503.38889

8,066.6111