How To Compute Lifetime Learning Credit

College courses tin can broaden your horizons – simply affording college costs while all the same making ends meet may seem incommunicable for the majority of Americans. If that sounds like you, we've got expert news: With the lifetime learning credit (LLC), the IRS allows you to claim upwardly to $2,000 for qualified education expenses (QEEs) for yourself, your spouse, or a dependent.

Lifetime Learning Credit on college student notebook

Concord on, though—before you lot rush out to enroll in that pottery course you've been itching to take, y'all should know that there are qualifications you lot and your educational establishment have to meet in order for you to merits the credit. They're pretty specific, so we'll guide you lot through the basics of what you should know in society to qualify and merits the lifetime learning credit.

Take other student tax filing questions? Exist sure to visit our Tax Guide for College Students and find out nearly student forms that can exist filed for free.

Nuts and bolts of the Lifetime Learning Tax Credit

First things showtime—exactly what is the lifetime learning tax credit? The concept is pretty simple, actually—if you are enrolled in one or more than courses at an eligible post-secondary educational institution, y'all can receive up to $ii,000 as a dollar-for-dollar credit on expenses paid. However, the IRS is pretty explicit on what expenses qualify for the lifetime learning credit and who is eligible.

Lifetime learning credit requirements and eligibility

To qualify for the Lifetime Learning Credit, you must meet requirements regarding your student status, educational institution, and expenses you lot want to claim.

An eligible institution is a post-secondary educational institution (including colleges, universities, vocational schools, etc.) that is allowed to participate in the educatee fiscal aid program from the U.S. Department of Teaching

Eligible expenses include tuition and fees and required grade-related equipment like books, beakers, and yep, maybe even that pottery wheel. The principal matter here is that the equipment must be listed as required by the institution equally part of a for-credit class. You cannot include expenses like housing, meals, medical expenses, transportation, or noncredit courses.

In add-on to standard degree programs, the LLC also covers the cost of workforce evolution and standing education courses. So, if you were putting off leveling up in the workplace because of the costs associated with professional learning, this may exist the answer you were looking for.

Computing your Lifetime Learning Credit amount

Bold y'all've passed all the requirements in a higher place, you may authorize for up to $2,000—simply the actual Lifetime Learning Credit amount you lot're immune may non be the full two $two,000.

The actual breakup is that the credit is will equal to 20% of your expenses, up to $10,000. In that location'due south as well a phase-out according to your income, meaning the credit amount is gradually reduced if your income is betwixt $80,000-$90,000 ($160,000 to $180,000 for joint filers) starting in tax twelvemonth 2021.

Other college education tax credits

If you don't authorize for the Lifetime Learning Credit, don't panic—you take other higher education tax credit options:

American Opportunity Tax Credit (AOTC)

The AOTC is bachelor for students or parents of students who are in the first four years of mail service-secondary didactics at qualified institutions. You're allowed to claim up to $ii,500, and you may not use it in tandem with the lifetime learning credit or tuition and fees deduction.

Tuition and Fees Deduction

Note: the Tuition and Fees Deduction has not been extended for revenue enhancement twelvemonth 2021.

The following details apply to previous tax years. The Tuition and Fees Deduction is as information technology sounds—an higher up-the-line income exclusion of tuition and eligible fees paid, up to $four,000. One difference betwixt this deduction and the Lifetime Learning Credit is that the income phase-outs are higher with the tuition and fees deduction, meaning it may be bachelor to some people whose income was also high to claim the Lifetime Learning Credit.

How to claim the Lifetime Learning Credit

Each year, you should receive a Grade 1098-T from your educational institution that reports your costs and what'south eligible for credits. To merits the LLC, you'd enter the info from your Form 1098-T onto Form 8863 and submit with your tax return. Filing taxes as a pupil can be tough—and filing taxes for your dependent student can seem tougher.