Karen is single and graduated from Marring University in May of 2015.In January of 2016,she begins repaying her student loans and in 2016 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 2015.In January of 2016,she begins repaying her student loans and in 2016 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

According to IRS rules, taxpayers can deduct up to $2,500 in student loan interest as a deduction for adjusted gross income, as long as their income falls below certain thresholds. Since Karen's income is below the threshold, she can deduct $2,500 of the $2,800 interest she paid. Therefore, statement I is correct and statement II is incorrect.

Karen Is Single and Graduated from Marring University in May