Question

George graduated from college last year and started repaying his student loans. He received Form 1098-E, Student Loan Interest Statement, showing he paid $3,000 in interest on his student loans for the year. His total income before adjustments is $68,500, and he meets all requirements to be able to deduct the interest. How much, if any, will George be allowed to deduct as an adjustment to his income?

Answer 1

George can deduct the full allowable limit of $2,500 from his taxable income, given that he has paid more than this amount in student loan interest and meets the eligibility criteria.

Step-by-step explanation:

George who recently graduated from college, paid $3,000 in student loan interest, which he can claim as an adjustment to his income on his taxes. For those eligible, the IRS allows taxpayers to deduct up to $2,500 of paid student loan interest per year.

Given that George's total income before adjustments is $68,500 and he meets all the qualifications, the amount he will be able to deduct will be the full $2,500 since it is less than the total interest he paid (which is $3,000), and within the limit for the student loan interest deduction.