Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Question

Quizplus · Accepted Answer

Morris can exclude the full $1,500 of interest from income because he used the entire redemption amount ($6,000) for qualified higher education expenses, which exceeded the principal amount of the bonds. The qualified expenses ($6,500) were more than the redemption amount, and his AGI does not affect the exclusion in this scenario.

Morris Redeemed $6,000 (Principal of $4,500 and Interest of $1,500)of