Asked by Vikki Yager on Jun 05, 2024
Verified
In 2016,Carlos,who is single,received his Bachelor's degree and started working.In 2017,he began paying interest on qualified education loans and had modified AGI of $70,000.He paid interest of $1,200 in 2017.Which of the following statements is correct?
A) Due to the phase-out rules,only a portion of the $1,200 will be deductible.
B) Taxpayers are not allowed a deduction for education loan interest in 2017.
C) The full $1,200 is deductible in arriving at adjusted gross income.
D) If his modified AGI had been $75,000,the phase-out rules would have reduced his deductible interest to zero.
Modified AGI
An adjustment to adjusted gross income, including or excluding certain items, used to calculate eligibility for specific tax benefits.
Education Loan Interest
The interest paid on a loan taken out to pay for educational expenses, which may be deductible on your taxes under certain conditions.
- Ascertain the allowable deduction for student loan interest by evaluating the adjusted gross income (AGI) and phase-out provisions.
Verified Answer
LM
lyeshia martinezJun 10, 2024
Final Answer :
A
Explanation :
The phase-out rules for the education loan interest deduction in 2017 begin at $65,000 MAGI ($130,000 for married filing jointly) and end at $80,000 MAGI ($160,000 for married filing jointly). Since Carlos' MAGI is $70,000, he is subject to a partial phase-out, which means only a portion of his $1,200 interest is deductible.
Learning Objectives
- Ascertain the allowable deduction for student loan interest by evaluating the adjusted gross income (AGI) and phase-out provisions.