This Year Riley Files Single and Reports AGI of $71,000

question 63

Multiple Choice

This year Riley files single and reports AGI of $71,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

• A) The deduction for qualifying education interest is $1,200.
• B) The deduction for qualifying education interest is $1,000.
• C) The deduction for qualifying education interest is $720.
• D) The deduction for qualifying education interest is $200.
• E) None of these.

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Definitions:

Income Effect

The change in an individual's or economy's consumption patterns due to a change in real income.

Substitution Effect

The economic principle that as the price of one good increases, consumers will replace it with a cheaper alternative, holding utility constant.

Price Change

A variation in the cost of goods or services over time, which can result from factors like supply and demand, inflation, or market dynamics.

Income

The amount of money received on a regular basis from work, property, investments, or government benefits.