This fall Marsha and Jeff paid $5,000 for their son Josh\'s tuition and fees at

Question

This fall Marsha and Jeff paid $5,000 for their son Josh's tuition and fees at State University (a qualified education institution). They also paid $1,000 for Josh's books. How much of these two payments can Marsha and Jeff deduct for AGI as tuition and fee deduction this year, assuming Josh is their dependent and their modified AGI is $135,000?

a.

Marsha and Jeff can deduct $5,000 for AGI.

b.

Marsha and Jeff can deduct $4,000 for AGI.

c.

Marsha and Jeff can deduct $2,500 for AGI.

d.

Marsha and Jeff can deduct $2,000 for AGI.

e.

None - the tuition is not deductible.

a.

Marsha and Jeff can deduct $5,000 for AGI.

b.

Marsha and Jeff can deduct $4,000 for AGI.

c.

Marsha and Jeff can deduct $2,500 for AGI.

d.

Marsha and Jeff can deduct $2,000 for AGI.

e.

None - the tuition is not deductible.

Explanation / Answer

Option D is correct.

As per IRS, $1000 can be deducted for tuition fees and $1000 can be deducted for books and other educational aid. Therefore, total amount they can deduct from their AIG is $2000.

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