VITA Tax Basics Practice Exam 2026 - Free VITA Tax Basics Practice Questions and Study Guide

To determine the correct amount for Latricia to use in calculating her student loan interest deduction after receiving educational assistance, it is important to understand how educational assistance affects the deduction. The student loan interest deduction allows taxpayers to deduct up to $2,500 of interest paid on qualified student loans, but this deduction can be impacted by any educational assistance received.

If Latricia received educational assistance that covers tuition or other qualified higher education expenses, it will reduce the amount of interest paid that can be considered for the deduction. The correct answer reflects the amount left after accounting for the educational assistance. Therefore, $6,200 represents the remaining interest that is eligible for deduction after Latricia’s educational assistance has been applied.

This amount is crucial, as claiming the correct figure ensures that Latricia adheres to IRS regulations regarding allowable deductions while maximizing her tax benefits. It is important to note that if the educational assistance fully covered her loan interest, the amount eligible for deduction would be $0, but in this case, since some interest is still deductible, $6,200 is the right choice.