Lifetime Learning Tax Credit

"Lifetime Learning Tax Credit" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

If you are an adult who wants to go back to school, change careers, or take a course or two to upgrade your skills OR a college junior, seniors, or graduate and professional degree students you may be eligible for this tax break.

A family will receive a 20% tax credit for the first $5,000 of tuition and required fees paid each year through 2002, and for the first $10,000 thereafter. Just like the "HOPE Scholarship" tax credit, the Lifetime Learning tax credit is available for tuition and required fees less grants, scholarships, and other tax-free educational assistance; families may claim the credit for amounts paid on or after July 1, 1998 for college or vocational school enrollment beginning on or after July 1, 1998.

The Lifetime Learning credit is subtracted from the taxes your family owes, rather than reducing taxable income like a tax deduction does. As of tax year 2009, your family can claim a tax credit of up to $2,000† per tax year for the taxpayer, taxpayer’s spouse or any eligible dependents. The Lifetime Learning credit is available for post secondary education and courses to acquire or improve job skills. Unlike the American Opportunity/Hope credit, the Lifetime Learning credit is available for an unlimited number of years.

This credit is family-based (up to $2,000 per tax return) rather than based on the number of students in your family, as with the American Opportunity/Hope credit. The actual amount of the credit depends on:

The Lifetime Learning credit allows you to claim:

Therefore, the maximum amount of a Lifetime Learning credit is $2,000†. The maximum credit is determined on a per-taxpayer (family) basis, regardless of the number of post-secondary students in the family, and is phased out at the same income levels as the HOPE Scholarship tax credit. Families will be able to claim the Lifetime Learning tax credit for some members of their family and the HOPE Scholarship tax credit for others who qualify in the same year.


An eligible taxpayer must:

The eligible student (or the taxpayer, if the taxpayer is also the student) must be enrolled in an eligible program leading to an undergraduate or graduate degree at an eligible school during the calendar year OR must be enrolled in any course of instruction at an eligible school to acquire/improve the student’s job skills during the calendar year.

You cannot claim the Lifetime Learning credit if:

You cannot get a refund for the Lifetime Learning credit if your family doesn’t pay taxes. If your family owes less in taxes than the maximum amount of the Lifetime Learning credit for which your family is eligible, you can only take the credit for the amount you owe in taxes.

Also Check:
Financial aid taxation for students:
Tax benefits and Tuition Reductions for Grants, Scholarships, Fellowships, Veterans, Student Loans, Interest Payments, Work-Study Awards.

Take Advantage of the New American Opportunity Tax Credit

Your family may be eligible to claim a tax credit of up to $2,500 per student. Part of the American Recovery and Reinvestment Act of 2009, this program expands the existing Hope credit to allow taxpayers to claim 100 percent of the first $2,000, plus 25 percent of the next $2,000, of “qualifying expenses,” i.e., tuition, fees and course materials paid during the tax year. That’s $700 more than the Hope credit allows families to claim. Also improving on the Hope credit, the American Opportunity Tax Credit (AOTC) adds books, supplies and equipment to the list of qualifying expenses, and allows the credit to be claimed for four years of post secondary education instead of two (but keep in mind, the AOTC is only for tax years 2009 and 2010). Even families whose tax liability is less than the credit amount can receive a refund of up to 40 percent of the credit amount they’re eligible to receive (up to $1,000). Taxpayers’ modified adjusted gross income must be $80,000 or less, or $160,000 or less for married couples filing jointly. Visit and type “American Opportunity Credit” into the search box for more information, and always consult a tax advisor to determine your individual tax situation.

Also Check: Comparison between american opportunity/hope credit and lifetime learning education credits

Read more:

Note for the American Opportunity / Hope and Lifetime Learning credits:

For Your Information (FYI):
This information’s covers a variety of important tax topics related to higher education. It is intended for your educational use and not as legal or tax advice; it does not cover every facet or the full scope of this subject. We highly recommend that you consult a professional tax advisor or attorney and encourage you to visit the Internal Revenue Service Web site, where you will find the complete text of various relevant IRS publications.

IRS Publications

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