A taxpayer is single, graduated college, and is now repaying her student loans. She paid $2,800 in interest on her loans in 2012. Her MAGI before considering any student loan interest deduction is $67,500. How much of an above-the-line deduction can she claim?
a. Incorrect. She would be allowed no interest deduction if her MAGI exceeded $75,000, which it did not.
b. Correct. Because her MAGI is within the phase-out range, she must figure a partial deduction.
c. Incorrect. This amount exceeds the maximum deduction of $2,500.
d. Incorrect. The full $2,500 deduction limit applies only if her MAGI is below $60,000, which it is not.