Shellie, a single individual, received her Bachelor's degree in 2017, and took a job with a salary of $45,000 per year. In 2018, she began paying interest on qualified education loans. She was able to pay $1,500 in 2018. Which of the following statements is correct?

a The full $1,500 is deductible in arriving at adjusted gross income (AGI).

b If her income had been $80,000, the deductible amount would have been phased out.

c If her payment had been $3,000, only $2,500 would have been deductible in arriving at AGI and the $500 excess would have been treated as nondeductible consumer interest.

d Taxpayers are not allowed a deduction for education loan interest in 2015.

Question

Business

Owen Thompson

1 October, 07:31

Shellie, a single individual, received her Bachelor's degree in 2017, and took a job with a salary of $45,000 per year. In 2018, she began paying interest on qualified education loans. She was able to pay $1,500 in 2018. Which of the following statements is correct?

a The full $1,500 is deductible in arriving at adjusted gross income (AGI).

b If her income had been $80,000, the deductible amount would have been phased out.

c If her payment had been $3,000, only $2,500 would have been deductible in arriving at AGI and the $500 excess would have been treated as nondeductible consumer interest.

d Taxpayers are not allowed a deduction for education loan interest in 2015.

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Answers (1)

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Andreas Bailey · Answer 1

The correct answer to the following question is option D) taxpayers are not allowed a deduction for education loan interest.

Explanation:

As per the question Shellie, who is a single individual, got her graduation degree in 2017 and she took a job of $45,000. From 2018 she was able to pay interest on her education loan and she paid $1500. Now since her annual gross income is less than $80,000, she is allowed a deduction up to $2500. So here the $1500 that she pays for interest on education loan would be allowed for deduction and the whole amount is deductible.