Solution
Requirement
a) Jack's adjusted gross income
Particulars Amount
Salary & Gross Income $178,460
Less-Alimony $ 30,600
Modified AGI $ 147,860
Less:Student loan interest deduction $ 1428.33 (calculation given below)
Adjusted Gross Income $146,431.67
AGI is $ 146,431.67 Jack's modified AGI calculated without adjustment for educational interest expense is $ 147,860. The moving expenses is not deductible.
He is allowed deduct part of his student loan interest because his modified AGI is not above $ 165,000
Jack's maximum deduction of $ 2,500 (The amount of interest paid upto $2,500). The maximum deduction of $ 2,500 is phased out ratably over a $30,000 range begining with modified AGI over $ 135,000
Consequently Jack's education interest expense deduction is
$ 1,428.33 = ($2,500-$ 2,500 x ($147,860- $ 135,000)
$30,000
b) Jack's AGI is computed as follows
Particulars Amount
Salary $ 178,460
Add Partnership income $ 8,850
Less Alimony ($ 30,600)
Modified AGI $ 156,710
Less Student loan Interest deduction ($690.83)
Adjusted Gross Income $156,019.17
AGI is $ 156,019.17 Jack's modified AGI calculated without adjustment for educational interest expense is $ 156,710. The moving expenses is not deductible.
He is allowed deduct part of his student loan interest because his modified AGI is not above $ 165,000
Jack's maximum deduction of $ 2,500 (The amount of interest paid upto $2,500). The maximum deduction of $ 2,500 is phased out ratably over a $30,000 range begining with modified AGI over $ 135,000
Consequently Jack's education interest expense deduction is
$ 690.83 = ($2,500-$ 2,500 x ($156,710- $ 135,000)
$ 30,000
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