The Lifetime Learning Credit is for those who attend college classes. It allows them to get a 20% tuition expenses credit with a phase out limit of $2,000 in tax credits on their first $10,000 of tuition expenses.
This credit is for you, your spouse, or your dependents that are in an eligible school and you had to pay the expenses for them. It differs from the American Opportunity Credit because you do not have to be in the first four years of undergraduate classes. People who have just taken one class can qualify for this credit.
Educational Institutions that Qualify
Accredited schools are considered eligible. Additionally, post-secondary schools and vocations schools qualify too. If the school accepts federal student aid programs via the US Department of Education, you can claim the Lifetime Learn tax credit for the tuition that you paid.
Expenses That Qualify
Expenses that are eligible for this credit include the fees and tuition that were paid for schooling. However, anything outside of that such as health, insurance, room and board, books, etc. are not eligible for the credit.
Additionally, you have to be the person who is responsible for covering the cost. You also have to reduce your qualifying expenses by the amount of assistance you received from various things such as grants or reimbursements. If you borrowed money such as from a student loan, you do not have to include this.
Who Is Eligible for This Credit
If you have a dependent child in college, you can claim this credit on your federal tax return. However, if your college student is not considered your dependent they are the ones who claim the credit on their federal tax return. In the event that you do not have a dependent but you pay their college expenses you are not eligible for the tax credit.
Income Limitations on the Credit
- To claim the full credit, your MAGI◊, modified adjusted gross income must be $66,000 or less or $132,000 or less if you are married and filing jointly.
- If your MAGI is between $56,000 and $66,000 (between $112,000 but less than $132,000 for married filing jointly), you receive a reduced amount of the credit.
- If your MAGI is over $66,000 ($132,000 for joint filers), you cannot claim the credit.
MAGI for most people is the amount of AGI, adjusted gross income, shown on your tax return. On Form 1040A, AGI is on line 22 and is the same as MAGI. If you file Form 1040, AGI is on line 38 and you add back the following:
Taxpayers could get $4,000 if they earned under $65,000 and under $130,000 for couples. However, if your income is between $65,000 and $80,000 or $130,000 and $160,000 for couples the maximum amount you will receive is $2,000.
If you file your taxes online, they will make sure you get the maximum amount of money possible. This results in you receiving your largest refund ever!
Their tax refund calculator can show you how much of a refund you can expect back from the IRS.