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Lifetime Learning Tax Credit

The Lifetime Learning Credit is a nonrefundable tax credit available to students and adults who are pursuing lifelong learning to upgrade their job skills. It may be claimed for payments of qualified tuition and related expenses made on or after July 1, 1998, for academic periods beginning or after July 1, 1998. This credit is an amount equal to 20% of the first $5,000 of qualified tuition and related expenses through the year 2002 and for the first 20% of the first $10,000 of qualified tuition and related expenses thereafter.

The eligibility requirements for the Lifetime Learning Credit are as follows:

  • The student must have a high school diploma or its equivalent.
  • The student must be enrolled in a degree, certificate, or program leading to a recognized credential and must attend an eligible post-secondary education institution, but does not have enrollment status requirements like the Hope Scholarship.
  • The student must be free of any conviction for a Federal or State felony offense due to the possession or distribution of a controlled substance.

Additional Lifetime Learning Credit information:

  • This tax credit is applicable to those enrolled in undergraduate and graduate education, as well as education geared to improve or acquire job skills.
  • The Lifetime Learning tax credit may be claimed for an unlimited number of years as long as the individual meets the income limits and takes classes at an eligible institution.
  • The credit may be used for part-time study, unlike the American Opportunity tax credit requirements, which stipulate a half-time enrollment status.
  • The Lifetime Learning Credit may be claimed for the taxpayer, the taxpayer's spouse, or an eligible dependent. This credit does not vary according to the number of students in a household.
  • It applies to all expenses paid after June 30, 1998 for education furnished in academic periods beginning after that date.
  • The Lifetime Learning Credit covers qualified costs, which includes tuition and fees, but specifically excludes books, room and board, nonacademic fees (i.e. student activity fee, insurance expenses, etc.) and expenses involving sports, games, or hobbies unless they are part of the student's degree program.
  • The credit is gradually phased out for taxpayers that have modified adjusted gross income between $40,000 and $50,000 ($80,000 to $100,000 for married taxpayers filing jointly).
  • Scholarships and grant aid do not count as qualified tuition and related expenses paid by the taxpayer. Only out-of-pocket expenses count, however, this includes gifts, bequests, and inheritances as qualified tuition and expense paid by the taxpayer.

Both the American Opportunity Credit and the Lifetime Learning Credit cannot be claimed for a specific student in the same tax year. However, a taxpayer may use the American Opportunity tax credit for certain family members and Lifetime Learning for other family members during the same tax year.

The above information is for informational purposes only and subject to change.

For more information, visit the IRS Lifetime Learning Credit page.