This Fall Millie Finally Repaid Her Student Loan

This fall Millie finally repaid her student loan. She originally borrowed the money to pay tuition several years ago when she attended at State University (a qualified educational institution) . This year Millie paid a total of $2,400 of interest on the loan. If Millie files single and reports $70,000 of income and no other items of income or expense how much of the interest can she deduct?

A) Millie can deduct $2,400 for AGI.
B) Millie can deduct $1,600 for AGI.
C) Millie can deduct $2,400 as an itemized deduction.
D) Millie can deduct $800 for AGI.
E) None - the tuition is not deductiblE.Millie may deduct the amount of interest paid ($2,400) reduced by the phase-out amount ($2,400 * [($70,000 - 65,000) /$15,000] = $800) .Thus, Millie may deduct $1,600 ($2,400 - $800 = $1,600) .

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free