Question

This year Noah paid $4,100 of interest on a loan that paid his undergraduate student loan used to pay tuition. How much of this payment can he deduct as interest expense on an educational loan if he files single and reports modified AGI of $76,000? A. $1,500. B. $4,100. C. $2,000. D. $0. E. $2,500.

Dan is a former executive who is retired. This year he received $260,000 in pension payments and $10,000 of social security payments. What amount must Tom include in his gross income?

   A.  
Zero

    B.  
$268,500

    C.  
$278,500

    D.  
$270,000

    E.  
$260,000

Answer 1

1) Answer is Option E.

Noah paid interest of $ 4100 on education loan. But as per provisions a person who is single can qualify for interest on educational loan deduction only when the perosn's modified AGI is $ 80,000.

So as per the question, Modified AGI is $76,000, Noah will qualify for deduction.

Maximium deduction allowed as per provisions is $ 2,500

So Noah will be eligible to get deduction of $2,500.

2) Answer is Option B.

Most pensions are taxable; however, some types of military pensions or disability pensions may be partially or entirely tax-free. Your pension provider will send you a 1099 form at the beginning of each year that shows you how much of your pension is taxable.

The portion of your benefits subject to taxation varies with income level. You’ll be taxed on:

• up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly.
• up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple).

So, Pension payments is $ 2,60,000 and 85% of $ 10,000 ( $ 8,500 )

Gross income = $ 2,68,500.

Thank you.