Lewis is an unmarried law student at State University,a qualified educational institution.Last year Lewis borrowed $30,000 and used the proceeds to pay his university tuition.This year Lewis paid $1,500 of interest on the loan.Which of the following is a true statement if Lewis reports $40,000 of salary and no other items of income or expense?
A)Lewis can deduct all the interest on his student loan for AGI.
B)Lewis can deduct all the interest on his student loan as an itemized deduction.
C)Lewis can only deduct $1,000 of the interest on his student loan for AGI.
D)Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction.
E)All of the choices are false.

Question

Quizplus · Accepted Answer

Lewis can deduct up to $2,500 of interest on his student loan for AGI, as long as his modified adjusted gross income is less than $85,000. Since Lewis has no other items of income or expense, his AGI is $40,000, which is less than $85,000, so he can deduct the full $1,500 of interest on his student loan for AGI. Option B is false because Lewis cannot deduct student loan interest as an itemized deduction if he is already deducting the full amount for AGI. Options C and D are false because Lewis can deduct up to $2,500 for AGI, not just $1,000. Therefore, the correct answer is A.

Lewis Is an Unmarried Law Student at State University,a Qualified