Question

Because of financial issues, Tina files a separate tax return from her husband. The amount of student loan interest she paid was reported to her on Form 1098-E, $2,850. Her modified AGI for year was $38,000. How much can Tina claim for student loan interest deduction?

a: $2,850

b: $2,500

c: $850

d: $0

Answer 1

B) $2500

Explanation:

Interest on student loan can be deducted upto the interest amount or $2500 whichever is less.(as of 2018).

Form 1098-E is received when a taxpayer pays more than $600 of interest from the lending institute. The form will have the borrower’s name, address, and unique taxpayer identification number.

If the taxpayer's income is more than $80000 than he will get no deduction

If it between 65000 to 80000 than he will get it on phase out basis

And if it is less than $65000 than he will get a maximum of $2500 deduction.

Thus tina will get a $2500 deduction.