In 2015,Carlos,who is single,received his Bachelor's degree and started working.In 2016,he began paying interest on qualified education loans and had modified AGI of $70,000.He paid interest of $1,200 in 2016.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The statement that "Due to the phase-out rules, only a portion of the $1,200 will be deductible" is correct. The deduction for education loan interest is subject to a phase-out rule based on the taxpayer's modified adjusted gross income (MAGI). In 2016, for taxpayers with MAGI between $65,000 and $80,000 (or $130,000 and $160,000 for married filing jointly), the deduction is gradually reduced until it is completely phased out. As Carlos' MAGI is $70,000, he is subject to the phase-out and only a portion of his interest expense will be deductible.

In 2015,Carlos,who Is Single,received His Bachelor's Degree and Started Working