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?

Question

Quizplus · Accepted Answer

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).

This Fall Millie Finally Repaid Her Student Loan