Question

This year Riley files single and reports modified AGI of $76,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

Answer 1

Solution and Explanation:

As per the income tax, if the income of a single taxpayer lies in the range of $65000 and $80000, the taxpayer is elgibile for a prtial deduction on his/her education on loan interest.

The partial interest deduction amount is calculated as follows:

Partial interest deduction allowed = $\text { Interest expense } *(\ 80000-\mathrm{AGI} / \ 80000-\ 65000)$

$=\ 1200 *(\ 80000-\mathrm{AGI} / \ 80000-\ 65000)$

$=\ 1200 * \{(580000-\ 76000 / \ 80000-\ 65000)}$

$=\ 1200 * \ 4000 / \ 15000$

= $320

Therefore, the allowed interest deduction in this case is $320.