Lifetime Learning Tax Credit

Federal tax credit worth up to $2,000 for college tuition expenses

Students talking in class
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The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of 20% of tuition expenses, with a maximum of $2,000 in tax credits on the first $10,000 of college tuition expenses. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses.

Unlike the American Opportunity credit, you need not be in the first four years of undergraduate classes. Even if you took only one class, you may take advantage of the Lifetime Learning Credit.

Eligible Educational Institutions

All accredited colleges and universities are eligible educational institutions. Additionally, vocational schools and other post-secondary institutions are also eligible. Basically, if the institution is eligible to participate in federal student aid programs through the US Department of Education, then you may use tuition paid to the school for claiming the Lifetime Learning tax credit.

Qualifying Expenses

Qualifying expenses include amounts paid for tuition and any required fees (such as registration and student body fees). Qualifying expenses do not include any of the following: books, supplies, equipment, room and board, insurance, student health fees, transportation, or living expenses.

You must be responsible for paying the college tuition and fees. You also need reduce your qualifying expenses when figuring your tax credit by the amount of financial assistance received from grants, scholarships, or reimbursements from your employer. You do not need to reduce your qualifying expenses, however, if you paid for college tuition using borrowed funds, including student loans, or by using gifts from family members.

Who Can Claim the Education Credits?

If your son or daughter is going to college and you claim him or her as a dependent, then you can claim the education credits on your tax return. If your son or daughter is no longer a dependent, then he or she should claim any education credits on his or her own tax return. If you pay the college expenses for someone who is not your dependent, you cannot claim any the tax credit.

Income Limitations on Lifetime Learning Credit

The amount of the Lifetime Learning Credit is limited over a phase-out range. If your modified adjusted gross income is below the phase-out, your tax credit is not reduced. If your income is in the middle of the phase-out range, your tax credit will be reduced. If your income exceeds the phase-out range, you are not eligible to claim the Lifetime Learning tax credit.

For the year 2016, the income phase-out ranges are:

  • $55,000 to $65,000 : Single, Head of Household, or Qualifying Widow
  • $110,000 to $130,000 : Married Filing Jointly

For the year 2015, the income phase-out ranges are:

  • $55,000 to $65,000 : Single, Head of Household, or Qualifying Widow
  • $110,000 to $130,000 : Married Filing Jointly

For the year 2014, the income phase-out ranges are:

  • $54,000 to $64,000 : Single, Head of Household, or Qualifying Widow
  • $108,000 to $128,000 : Married Filing Jointly

For the year 2013, the income phase-out ranges are:

  • $53,000 to $63,000 : Single, Head of Household, or Qualifying Widow
  • $107,000 to $127,000 : Married Filing Jointly

For the year 2012, the income phase-out ranges are:

  • $52,000 to $62,000 : Single, Head of Household, or Qualifying Widow
  • $104,000 to $124,000 : Married Filing Jointly

Comparisons with Other Education-Related Tax Breaks

The tuition and fees tax deduction expired at the end of 2014. This deduction, which could possibly be renewed by Congress, was similar to the Lifetime Learning Credit in that both tax breaks were available to any student taking college classes or other post-secondary education, regardless of whether they were studying full or part-time.

Compared to the American Opportunity Credit, the Lifetime Learning Credit is available for any level of post-secondary education (undergraduate, graduate, extension courses, vocation schools, and so forth). The American Opportunity Credit, by contrast, is available only for the first four years of post-secondary education. Also, the American Opportunity Credit is phased out for people with modified adjusted gross income from $80,000 to $90,000 (unmarried people) or $160,000 to $180,000 (for married couples filing jointly) for the year 2016. By contrast, for 2016, the Lifetime Learning Credit is phased out for unmarried persons with $55,000 to $65,000 of modified adjusted gross income. Thus the American Opportunity Credit is available for students (or their parents) over a larger income range compared to the Lifetime Learning Credit.

Resources from the IRS

 

Last revised 10/26/2015.