What is the Lifetime Learning Credit?

The Lifetime Learning Credit is a federal tax credit to offset expenses associated with higher education. There is no age limit and the credit can be applied to part-time student courses, even if it is only one class. The credit is for 20% of the related expenses up to a maximum of a $2,000 credit per household. Tax credits are a dollar-for-dollar reduction of taxes due.

The Lifetime Learning Credit can be used for higher education expenses, regardless of the age of the student, but there is a household limit per year. 20% of educational expenses up to a household maximum of $2,000 can be applied as an income tax credit. The credit exists to make it easier for Americans to increase their skill-set and education.

Other tax credits may require that students be enrolled in the first two years of post-secondary education, as with the Hope Credit, or a four year undergraduate program, as with the American Opportunity Credit (AOTC). Note that the Hope Credit is separate and distinct from the Hope Scholarship program available to students from Georgia.

The Lifetime Learning Credit can be seen as an alternative to the Hope Credit, since both cannot be taken in the same year and they have the same income phase-out. Neither of these can be used if an individual has an income over $65,000 (in 2016) or $130,000 jointly.

The Hope credit can increase based on the number of students in the household, but the lifetime learning credit will not. The Lifetime Learning Credit does not include room-and-board as a qualifying educational expense.

You can read more about the Lifetime Learning Credit on the IRS website — found here.

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