Quiz 4: Adjustments for Adjusted Gross Income

Business

Tax law provides certain benefits for student loans who obtain higher education for expenses that occur when they attend qualified higher education. The expenses are paid when they borrow money from bank or any student loan program. Also loan amount is provided for a person who is legally eligible to pay the interest amount and not any dependant person can obtain the amount. Qualified educational loan is one obtained for payment for higher education claimed by the taxpayer on behalf of their spouse or any person dependant on the individual. This loan amount should be used only for educational expense and no other payment will be entertained.This loan amount is disbursed 3 months before or after the completion of academic period and the education may be undergraduate or graduate level of study. Thus, qualified educational loan refers to payment incurred by the taxpayer for educational purpose and they are solely responsible for repayment of the amount within the given time period.

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Qualified educational expense refers to the expense spent for attending an eligible educational institution which would include all the necessities of education. Educational expense to become qualified for deduction when they are used for non-educational expense.Qualified educational expense are those that include- • Tuition • Fees • Books • Supplies • Equipment • Room • Board • Transportation • Any necessary expense of attendance However, the taxpayer should reduce the qualified expense by gaining support to exclude it from gross income.Thus, qualified educational expense includes those that are spent for attending eligible educational institution that are necessary for the study.

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There is no answer for this question