Question

Martin redeemed $3,000 (principal of $2,000 and interest of $1,000) of Series I Savings Bonds to pay qualified higher education expenses. His qualified expenses for the year totaled $2,500 and AGI consists of wages of $20,000. What is the amount of interest that Martin must include in income?

Answer 1

Answer:

$167

Explanation:

Remember, that Martin's Annual Gross Income (AGI) consists of wages of $20,000.

To calculate the amount of interest that Martin must include in income;

Find the percentage of His qualified expenses for the year with the amount redeemed, multiplied by his interest

$= \frac{2500}{3000}$× 1000

=$833 is excluded from income.

Included to income=$1000-$833= $167