Question

Problem 5-53 (LO. 2) Starting in 2009, Chuck and Luane have been purchasing Series EE bonds in their name to use for the higher education of their daughter Susie, who currently is age 18. During the year, they cash in $12,000 of the bonds to use for freshman year tuition fees, and room and board. Of this amount, $5,000 represents interest. Of the $12,000, $8,000 is used for tuition and fees and $4,000 is used for room and board. Chuck and Luane's AGI, before the educational savings bond exclusion, is $126,950. Review $ 135, and answer the following questions. If an amount is zero, enter "O". a. Chuck and Luane, who will file a joint return, and Susie want to understand the tax consequences. For each statement below, help them by indicating whether the statement is "True" or "False" True • The Series EE savings bonds qualify as educational savings bonds. • The room and board for a dependent qualify as higher education expenses. False True • Since the redemption amount exceeds the qualified higher education expenses, only part of the interest qualifies for exclusion. • Chuck and Luane's savings bond exclusion is not subject to any phase-out provision. False If Chuck and Luane file a joint, how much is the savings bond exclusion? Round any division to five decimal places. Round your final answer to the nearest dollar. $ Feedback Check My Work Congress has attempted to assist low-to middle-income parents in saving for their children's college education. One of the ways Congress assists such families is through an interest income exclusion on educational savings bonds.

Answer 1

Ans. 2 con ► diction to o they Educational Savings Bonds The Interest earning of the educational saving Bous serica EE are excluded from 4 Gross Income only if the boud Proceeds are used to Pay qualified higher education expense. In this case The savings bonds Cal have { invested qualify as educational saving bonds They satisfy Other older than 24 years and the savings bond issued after after 1989, and paying the tuition fees of 8000 for Susie their dependent also qualifies for higher education expense llowever board expense of 4000 qualify for deduction as the gedemption amount of 12000 f is more than the qualified higher edu cation expense of 8000 only 13,333 1 the goom and does not 5000 X 8000 out of total iuferest Received 12990 4 qualifies for the exclusion,