Lionel is an unmarried law student at State University Law School, a qualified educational institution. This...

Lionel is an unmarried law student at State University Law School, a qualified educational institution. This year Lionel borrowed $27,000 from County Bank and paid interest of $1,620. Lionel used the loan proceeds to pay his law school tuition. Calculate the amounts Lionel can deduct for higher education expenses and interest on higher-education loans under the following circumstances:

a. Lionel's AGI before deducting interest on higher-education loans is $50,000.

b. Lionel's AGI before deducting interest on higher-education loans is $79,000.

c. Lionel's AGI before deducting interest on higher-education loans is $90,000.

Expert Solution

For 2020, the maximum deduction for Tution fees for MAGI upto $65000 is $4,000,

For MAGI between $65,001 and $80,000 the deduction is $2,000

and for MAGI above $80,000 it is nil.

The student loan interest deduction is max $2,500, so Lionel will get deduction of $1620 of student loan interest.

Calculation s;	AGI	Tutuion fee deduction	Student loan interest deduction	Total Deduction
a. AGI before interest & Tution fees deduction is $50,000	$ 50,000.00	$ 4,000.00	$ 1,620.00	$ 5,620.00
b. AGI before interest & Tution fees deduction is $79,000	$ 79,000.00	$ 2,000.00	$ 1,620.00	$ 3,620.00
c. AGI before interest & Tution fees deduction is $90,000	$ 90,000.00	-	$ 1,620.00	$ 1,620.00

ekkarill92 answered 2 years ago

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