In December of this year, Paul, who is single, redeemed qualified Series EE U.S. Savings Bonds. The proceeds were used to help pay for his daughter's college tuition. Paul received proceeds of $10,000 representing principal of $7,000 and interest of $3,000. The qualified higher educational expenses he paid this year totaled $6,000. Paul has other adjusted gross income of $85,350. What is the amount of interest income Paul can exclude from his income this year

Respuesta :

Answer:

$1,800

Explanation:

The computation of the amount of interest income that should be excluded is as follows:

Given that

Proceeds received $10,000  

Principle $7,000  

Interest   $3,000  

Qualified Higher Educational expenses $6,000

Now the amount excluded is  

= $3,000 ×($6,000 ÷ ($7,000 + $3,000))  

= $1,800