Fiona, a single taxpayer, buys a U.S. savings bond when she is 25 years old for $10,000 and redeems it for $12,000 several years later and spends the entire $12,000 of college tuition for herself. How much interest income is she taxed on if her AGI is $85,350. Note: The applicable "phase-out" range runs from $82,350 to $97,350.