Karen is single and graduated from Marring University in May of 2016.In January of 2017,she begins repaying her student loans and in 2017 pays $2,800 of interest on the loans.Her adjusted gross income is $51,000.
I.Karen can deduct $2,500 of interest as a deduction for adjusted gross income.
II.Karen can deduct $2,800 of interest as a deduction from adjusted gross income.

Question

Karen is single and graduated from Marring University in May of 2016.In January of 2017,she begins repaying her student loans and in 2017 pays $2,800 of interest on the loans.Her adjusted gross income is $51,000.
I.Karen can deduct $2,500 of interest as a deduction for adjusted gross income.
II.Karen can deduct $2,800 of interest as a deduction from adjusted gross income.
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Quizplus · Accepted Answer

Karen can deduct up to $2,500 of her student loan interest as a deduction for adjusted gross income, as long as her income is less than $65,000. Since her income is $51,000, she may deduct the full $2,500. Therefore, statement I is correct.
Statement II is incorrect because Karen can only deduct up to $2,500 of interest as a deduction for adjusted gross income, not the entire $2,800.

Karen Is Single and Graduated from Marring University in May