Jacob,who is single,paid educational expenses of $16,000 in the current year.He redeemed Series EE bonds and received principal of $8,000 and interest of $3,000.Jacob has other adjusted gross income of $80,000. The $3,000 exclusion must be reduced by

Question

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The exclusion is reduced because Jacob's modified adjusted gross income exceeds the phase-out threshold for the education savings bond program. The reduction is calculated based on the proportion of income over the threshold.

Jacob,who Is Single,paid Educational Expenses of $16,000 in the Current