Question

Mike paid $4,000 of interest on a qualified education loan that he used to pay for his dependent son’s college education. How much of this payment can Mike deduct as a for AGI deduction if he files married-joint and reports modified AGI of $150,000? Multiple Choice $4,000 $2,500 $2,000 $1,250 None of the choices are correct - no deduction is allowed.

Answer 1

$1,250

Step-by-step explanation:

The cap for student loan in behalf of your son if deductible up to 2,500.

The requirement are:

qualified loan.

married filing jointly which aren't dependents on someone else's tax return

Income below for married filing jointly: 135,000

Above this, it pahses out gradually until 165,000 dollars.

Therefore, the calculation are as follow:

interest paid: 4,000

cap: 2,500

max deduction: 2,500

according to income:

135,000 -> deduction for 2,500

165,000 -> deduction for 0

Mike and his spouse income: 150,000

150,000 is half way so they can deduct half the amount: 1,250