Martin Redeemed $3,000 (Principal of $2,000 and Interest of $1,000)of

question 38

Multiple Choice

Martin redeemed $3,000 (principal of $2,000 and interest of $1,000) of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $2,500 and AGI consists of wages of $20,000.What is the amount of interest that Martin must include in income? (Round interim calculations to three decimal places)

• A)$0.
• B)$833.
• C)$167.
• D)$1,000.

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Definitions:

FUTA

FUTA (Federal Unemployment Tax Act) is a United States federal law that imposes a payroll tax on any business with employees, the funds are used to pay unemployment benefits.

SUTA

State Unemployment Tax Act, referring to state-level taxes that employers must pay towards state unemployment insurance programs.

Overtime Rate

The rate of pay for work performed beyond the normal working hours, typically higher than the regular pay rate.

Total Wages

The sum of all compensation, including salaries and wages, paid to employees over a specified period.