Question
10) Exclusion for Series EE and I U.S. Savings Bonds (Obj. 5) 401.03 Irina cashes in Series I Savings Bonds during 2021. She receives $18,755,
10) Exclusion for Series EE and I U.S. Savings Bonds (Obj. 5) 401.03 Irina cashes in Series I Savings Bonds during 2021. She receives $18,755, of which $15,000 was principal and the rest interest. Irina uses the proceeds to pay out-of-state tuition and fees totaling $16,500 for her son, who is a full-time student during the year. She uses the rest of the proceeds to pay for her sons room and board. Irinas filing status is head of household. Irinas only other source of income is her $80,700 salary.
Compute Irinas exclusion for Series EE and I interest and her AGI. Calculations you'll need to use: Modified AGI = Salary + Savings bond interest + Foreign earned income exclusion Initial excludable bond interest = (Tuition & fees paid / Total proceeds from bonds) x Interest received Excess modified AGI = Modified AGI Threshold for unmarried taxpayers Reduction of exclusion = (Excess modified AGI / Principal received) x Initial exclusions Final exclusion amount = Initial exclusion Reduction due to excess modified AGI Taxable interest income = Interest received Final exclusion amount AGI = Salary + Taxable interest income
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