Volunteer Income Tax Assistance (VITA) Certification Practice Test

What is the amount of Evan's student loan interest deduction from Form 1040, page 1?

1. $4,900

2. $5,500

3. $3,000

4. $2,100

The correct answer is: $4,900

To determine Evan's student loan interest deduction, it is essential to understand the guidelines surrounding this deduction on Form 1040. The student loan interest deduction allows individuals to deduct interest paid on qualified student loans, reducing their taxable income. For the tax year 2023, the maximum deduction for student loan interest is $2,500 for each eligible taxpayer. However, the amount that can be claimed may vary depending on individual circumstances, such as the exact amount of interest paid or income limitations that could phase out some or all of the deduction. The answer provided reflects an understanding of the potential amounts that could be reasonable deductions based on typical interest payments. However, without seeing Evan's specific student loan interest amount, the deduction he can claim should not exceed the maximum limit. Therefore, the value of $4,900 would be above the allowable deduction cap, which suggests that this answer does not align correctly with IRS regulations regarding student loan interest. In this context, it's crucial to clarify that the actual claim should be guided by what Evan specifically paid in interest within the year. If he paid more than the maximum cap, his deductible amount would still be limited to $2,500. Therefore, while $4,900 is presented as an option, it cannot