## Explanation Tam attended Bryon University and incurred various student loan interests during 2021. The problem asks **how much student loan interest Tam and her spouse can deduct on their 2021 tax return**. ### Key Information from the Problem: - Tam paid **$1,000** interest on federal student loans. - Tam paid **$250** interest on a personal bank loan (used to pay tuition). - Her spouse paid **$1,500** interest on their own qualified student loans. - The maximum allowable student loan interest deduction is **$2,500** per return (not per person). ### Eligible Deductible Interest: - Only interest paid on **qualified student loans** is deductible. - **Personal bank loans** (even if used for tuition) **do not qualify**. #### Breakdown: - Tam’s qualifying interest: **$1,000** (federal student loan) - Spouse’s qualifying interest: **$1,500** (qualified student loan) - **Do not include** the $250 (personal loan). **Total eligible interest paid:** $1,000 (Tam) + $1,500 (Spouse) = $2,500 ### Final Summary **Tam and her spouse can deduct $2,500 in student loan interest on their 2021 tax return.** --- #### Table for Clarity: | Paid By | Type of Loan | Interest Paid | Deductible? | Amount Deductible | |------------|----------------------|---------------|-------------|-------------------| | Tam | Federal Student Loan | $1,000 | Yes | $1,000 | | Tam | Personal Bank Loan | $250 | No | $0 | | Spouse | Qualified Student Loan| $1,500 | Yes | $1,500 | | **Total** | | | | **$2,500** | --- > **Amount of student loan interest deduction for 2021:** > **$2,500**

## Explanation The scenario involves Tam, who attended Bryon University and incurred various student loan interests during 2021. We need to determine **how much student loan interest Tam and her spouse can deduct on their 2021 tax return**. ### Key Information - Tam paid **$1,000** interest on federal student loans. - Tam paid **$250** interest on a personal bank loan (used for tuition). - Her spouse paid **$1,500** interest on their own qualified student loans. - The maximum allowable student loan interest deduction is **$2,500** per tax return. ### Eligible Deductible Interest Only interest paid on **qualified student loans** is deductible. Interest on **personal loans** does not qualify. #### Breakdown of Interest - **Tam's Qualifying Interest:** - $1,000 (federal student loan) - **Spouse's Qualifying Interest:** - $1,500 (qualified student loan) - **Non-qualifying Interest:** - $250 (personal bank loan) **Total eligible interest paid:** $1,000 (Tam) + $1,500 (Spouse) = $2,500 ### Final Summary **Tam and her spouse can deduct $2,500 in student loan interest on their 2021 tax return.** --- #### Deduction Summary Table | Paid By | Type of Loan | Interest Paid | Deductible? | Amount Deductible | |------------|----------------------|---------------|-------------|-------------------| | Tam | Federal Student Loan | $1,000 | Yes | $1,000 | | Tam | Personal Bank Loan | $250 | No | $0 | | Spouse | Qualified Student Loan| $1,500 | Yes | $1,500 | | **Total** | | | | **$2,500** | --- > **Amount of student loan interest deduction for 2021:** > **$2,500**