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 $78,700.The $3,000 exclusion must be reduced by

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The exclusion must be reduced by the amount of Jacob's adjusted gross income above a certain threshold. For a single taxpayer, this threshold is $79,700 in 2021. Jacob's adjusted gross income is $78,700, which is $1,000 below the threshold. Therefore, his exclusion must be reduced by $1 for every $1 of adjusted gross income below the threshold. Since Jacob's income is $1,000 below the threshold, the exclusion must be reduced by $1,000. Therefore, the excluded amount is $3,000 - $1,000 = $2,000.

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