In 2015, Edward and Pat Jefferson redeemed $8,000 of Series EE U.S. savings bonds (principal of $5,500 and interest of $2,500), the proceeds from which were used to pay for qualified higher education expenses of their dependent daughter who is attending a qualified educational institution. For the year, tuition and fees were $8,000 and room and board cost $7,000. The daughter received a $2,000 tax-exempt scholarship during the year that was used to pay tuition and fees. The Jeffersons’ modified AGI was $96,000 in 2015. They do not participate in any other higher education-related programs. Calculate the amount of savings bond interest that the Jeffersons can exclude from gross income in 2015.
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