How to Deduct Interest Expenses for Randy?

How much of Randy's interest expense can he deduct as an itemized deduction?

Calculating Randy's Deductible Interest Expenses

Randy's Total Income and AGI: Randy paid $29,000 of interest on his residence loan, $2,500 on his car loan, and $4,200 of margin interest to his stockbroker this year. He received $2,200 of investment income. His AGI is $75,000.

Deductible Interest Expenses:

1. Residence Loan Interest ($29,000): Randy borrowed $450,000 to buy his residence, currently worth $500,000. Since the loan amount is below the limit of $750,000, Randy can deduct the full $29,000 of interest paid on the residence loan. 2. Car Loan Interest ($2,500): The interest on Randy's car loan is fully deductible as it is considered personal interest. 3. Investment Interest Expense ($2,200): Randy's investment interest expense is $4,200, but he only received $2,200 of investment income. Therefore, he can only deduct $2,200 as investment interest expense. Total Deductible Interest Expenses: Randy can deduct a total of $33,700 as an itemized deduction for his interest expenses.

Randy can deduct a total of $33,700 as an itemized deduction for his interest expenses.

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