David’s filing status is qualified widower. With a modified AGI of $83,000 and paid student loan interest of $2,700, how much can he deduct?

In this scenario, David has a modified adjusted gross income (AGI) of $83,000 and paid student loan interest of $2,700. The deduction for student loan interest is subject to certain income limits, specifically for taxpayers who have a modified AGI above certain thresholds.

For the tax year 2023, the student loan interest deduction begins to phase out when modified AGI exceeds $75,000 for single filers and married individuals filing separately, which applies in David's case since his filing status is qualified widower (considered a single filer). The deduction is completely phased out at an AGI of $90,000.

Given that David's modified AGI of $83,000 exceeds the threshold of $75,000, he is in the phase-out range. The amount of the deduction is reduced by $50 for every $1,000 of modified AGI above $75,000.

David's modified AGI exceeds the threshold by $8,000 ($83,000 - $75,000). This excess AGI translates into a reduction of the student loan interest deduction as follows:

• For each $1,000 over the $75,000 threshold, the deduction is decreased by $50.