What is the Lifetime Learning Credit?
The Lifetime Learning Credit (LLC) is a tax credit designed to help individuals offset the costs of higher education. Unlike the American Opportunity Tax Credit, which is limited to the first four years of post-secondary education, LLC can be claimed for an unlimited number of years.
The credit is worth up to 20% of the first $10,000 spent on qualified education expenses, resulting in a maximum credit of $2,000 per tax return, regardless of the number of students in the household. It's important to note that the credit phases out for individuals with a modified adjusted gross income (MAGI) above certain thresholds, specifically $59,000 for single filers and $118,000 for joint filers in 2023.
Eligible expenses include tuition and fees required for enrollment or attendance at an eligible educational institution, which may include colleges, universities, and vocational schools. Unlike other credits, the LLC is non-refundable, meaning it can only reduce the tax owed to zero but will not result in a refund.
Taxpayers can claim the LLC even if they do not have a full-time course load, making it a flexible option for those pursuing part-time education or career development courses. To claim the credit, taxpayers must file Form 8863 with their tax return, and keep records of their educational expenses and eligibility.