Morris redeemed $6,000 principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Question

Quizplus · Accepted Answer

The amount of interest that Morris can exclude from his income is equal to the amount spent on qualified higher education expenses (up to the amount of the redemption). As Morris spent a total of $6,500 on such expenses and redeemed bonds with a principal of $6,000 (which includes $1,500 of interest), he can exclude all $1,500 of the interest from his income. Therefore, the correct answer is (B) $1,500.

Morris Redeemed $6,000 Principal of $4,500 and Interest of $1,500)of