In December of this year, David and Mary, a married couple, redeemed qualified Series David and...

In December of this year, David and Mary, a married couple, redeemed qualified Series David and Mary received proceeds of $10,000 representing principal of $7,000 and interest of $3,000. The qualified higher educational expenses they paid this year totaled $6,000. Their AGI for 2018 is $125,550. What is the amount of interest income that David and Mary can exclude from their income this year?

A)$1440
B)$1840
C)$2400
D)$3400

Expert Solution

Tax free interest = Interest x Qualified higher educational expense/Proceeds of qualified series
= 3000 x 6000/10000
= 3000 x 0.60
= 1800

Phase out Threshold = 119250
Phase out limit = 147250
Phaseout reduction = Tax free interest x (MAGI-Phaseout Threshold)/(Phaseout limit - Phaseout Threshold)
= 1800 x (125550-119550)/(149550-119550)
=1800 x 6000/30000
= 1800 x 0.20
= 360

Amount of exclusion = Tax free interest - Phaseout reduction
= 1800-360
= 1440

ekkarill92 answered 2 years ago

29). In December of this year, Sam and Esterina, a married couple, redeemed qualified Series EE...

29). In December of this year, Sam and Esterina, a married couple, redeemed qualified Series EE U.S. Savings Bonds. The proceeds were used to help pay for their daughter's college tuition. Sam and Esterina received proceeds of $12,000 representing principal of $9,000 and interest of $3,000. The qualified higher educational expenses they paid this year totaled $9,000. Their AGI is for 2018 is $129,550. What is the amount of interest income Sam and Esterina can exclude from their income this...

Jack & Mary Jones are married in December 30, 2018, they have no children or dependents....

Jack & Mary Jones are married in December 30, 2018, they have no children or dependents. Their divorce became final on December 31, 2018. Of the Income earned, Jack’s total income is $500,000 but his taxable income is $425,000. What is Jack’s Filing Status for 2018? What is their Marginal Tax Rate for 2018? What is his Tax Liability for 2018? What is his Average Tax Rate What is his effective Tax Rate of taxable income? If Jack discover he...

Eileen and Hal, a married couple filing jointly, received $10,000 of Series I bond interest in...

Eileen and Hal, a married couple filing jointly, received $10,000 of Series I bond interest in 2020. If all the proceeds of the redeemed bond were used to pay qualified education expenses and their modified adjusted gross income exceeded the applicable dollar amount by $30,000, how much of the bond interest could they exclude from income?

Mary and David are planning for their wedding ceremony one and a half year from now....

Mary and David are planning for their wedding ceremony one and a half year from now. They were advised by the wedding planner that the wedding cost should be around USD 28,000.This couple has gone through their budget and found that they can invest USD 300 per weekfrom the freelance income starting from this week. This couple has opened accounts at The Tracker Fund of Hong Kong and China Government Bond. The first fund follows an investment strategy designed to...

Jason and Mary Wells, friends of yours, were married on December 30, 2018. They know you...

Jason and Mary Wells, friends of yours, were married on December 30, 2018. They know you are studying taxes and have sent you an e-mail with a question concerning their filing status. Jason and Mary would each like to file single for tax year 2018. Jason has prepared their taxes both as single and married filing jointly, and he has realized that the couple will get a larger combined refund if they each file single. Jason argues “that it’s not...

Q1) Suppose you are a farmworker couple, recently married, living in Pakistan. In a good year,...

Q1) Suppose you are a farmworker couple, recently married, living in Pakistan. In a good year, you might make $600. Infant mortality rates are high—your children will have a one in ten chance of dying during their first year. The likelihood of your children attending more than a couple of years of school is also very small. Nationwide, only 38% of boys and 27% of girls attend primary school, and you are among the least likely to have access to...

COUPLE INTERVIEW You are asked to interview a couple who has been married or cohabitating for...

COUPLE INTERVIEW You are asked to interview a couple who has been married or cohabitating for at least five continuous years and write a paper which summarizes both the interview content and your personal observations and thoughts about the relationship. The interview must be conducted with both parties present at the same time and the interview must be a minimum of 45 minutes long. Use the following outline to structure your interview and paper: I. Introduction: Introduce your topic (marriage...

Advanced Scenario 6: Matthew and Mary Donnelly Interview Notes • Matthew and Mary are married and...

Advanced Scenario 6: Matthew and Mary Donnelly Interview Notes • Matthew and Mary are married and want to file a joint return. They provided all the cost of keeping up the home and all of the support for their son Ryan. • Ryan has no income and no filing requirement. • Matthew retired and began receiving retirement income on April 1, 2018. No distributions were received prior to his retirement. Matthew selected a joint survivor annuity for these payments. •...

Mary and Bob have been married for 25 years. They are both college professors. Mary (50...

Mary and Bob have been married for 25 years. They are both college professors. Mary (50 years of age) makes $65,000 annually and Bob (60 years of age) makes $75,000 annually. Their oldest daughter is getting married. Bob and Mary would like to either 1) take out a second mortgage on their home (they can get an interest rate of 7 percent) or 2) withdraw funds from their IRAs or 3) sell their rental property. The cost of the wedding...

Hilda and Horace, a married couple, were both previously married to others. Horace has an estate...

Hilda and Horace, a married couple, were both previously married to others. Horace has an estate of $2 million from which he would like to provide income for Hilda following his death, but at her death, he would like the $2 million to be distributed to his children from his first marriage. Hilda has a fairly large estate and very little use for Horace's children. Horace wants Hilda to have the income and use of the trust assets, if needed,...

Question