Taxes Tax Credits & Deductions The Lifetime Learning Tax Credit: What It Is and How to Qualify This federal tax credit is worth up to $2,000 per year By William Perez William Perez Twitter William Perez is a tax expert with 20+ years of experience advising on individual and small business tax. He has written hundreds of articles covering topics including filing taxes, solving tax issues, tax credits and deductions, tax planning, and taxable income. He previously worked for the IRS and holds an enrolled agent certification. learn about our editorial policies Updated on January 17, 2022 Reviewed by Ebony J. Howard Reviewed by Ebony J. Howard Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Eligible Educational Institutions Qualified Expenses Who Can Claim the Education Credits? Income Limitations Claiming the Lifetime Learning Credit Lifetime Learning Credit vs. American Opportunity Tax Credit Frequently Asked Questions (FAQs) Photo: Cultura / Frank and Helena / Riser / Getty Images You can claim the Lifetime Learning credit if you, your spouse, or any of your dependents are enrolled at an eligible educational institution and responsible for paying those college costs. The credit can help pay for undergraduate, graduate, and professional degree courses, as well as those courses to acquire or improve job skills. The Lifetime Learning tax credit is equal to 20% of the first $10,000 in tuition expenses you pay per year, up to a maximum credit of $2,000, regardless of the number of individuals for whom you paid qualified education expenses. Note $10,000 is the collective cap. You can't claim a credit for each student. The Lifetime Learning credit isn't restricted to the first four years of undergraduate enrollment, and the student doesn't necessarily have to attend full time. This means you might still be eligible if you took only one class. Eligible Educational Institutions All accredited colleges, universities, vocational schools, and other post-secondary institutions qualify as eligible educational institutions with this credit. You can use tuition paid to the school for claiming the Lifetime Learning credit if the learning institution is eligible to participate in federal student aid programs through the U.S. Department of Education. Qualified Expenses Qualifying expenses include amounts paid for tuition and any required fees, such as registration and student body fees. They do not include books, supplies, equipment, room and board, insurance, student health fees, transportation, or living expenses. You must reduce your qualifying expenses by the amount of any financial assistance received from grants, scholarships, or reimbursements. Still, you don't have to reduce them if you pay college tuition using borrowed funds. This borrowing includes student loans or gifts from family members. Who Can Claim the Education Credits? If you have a dependent and the dependent is going to college—and you're the one paying for it—you can claim the education credit on your tax return. If your dependent is paying for their education themselves, they can claim education credits on their tax return—unless you claim them as a dependent. Note You can't claim the Lifetime Learning credit if you pay college expenses for someone who isn't your dependent, and you can't claim it if you're married but filing a separate tax return. Non-resident aliens can't claim the credit if they don't elect to be treated as resident aliens for tax purposes, according to the IRS. Income Limitations The amount of the Lifetime Learning credit you can claim begins to phase out at certain income limits. Your tax credit amount isn't reduced if your modified adjusted gross income (MAGI) is below the phase-out limit, but it will be reduced if your income is more. MAGI thresholds for tax year 2021, the taxes you will pay in 2022, are $80,000 or less for single or head-of-household filers, and $160,000 or less for people married and filing jointly. If your MAGI is over $80,000 but less than $90,000, (over $160,000 but less than $180,000 for married taxpayers filing jointly), your credit is reduced. If your MAGI is over $90,000 ($180,000 for married taxpayers filing joint), you can't claim the credit. Claiming the Lifetime Learning Credit Claiming the Lifetime Learning credit requires filing IRS Form 8863 with your tax return. Completing Parts III and IV of this form will help you figure out the amount of credit you can claim. Note Tax laws change periodically and you should always consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice. Lifetime Learning Credit vs. American Opportunity Tax Credit The Lifetime Learning credit and the American Opportunity credit both lessen the financial burden of educational costs. The American Opportunity tax credit is restricted to the first four years of undergraduate classes, though, while the Lifetime Learning credit is available for any level of post-secondary education—undergraduate, graduate, extension courses, or even vocational schools. The American Opportunity credit can often be greater, so taxpayers typically only claim the Lifetime Learning credit when they cannot claim the American Opportunity credit due to its enrollment restrictions. Note You can't claim both the Lifetime Learning credit and the American Opportunity credit for the same student in the same year. However, you can claim the Lifetime Learning credit for one student and the American Opportunity credit for another. Up to 40% of the American Opportunity credit is refundable up to $1,000. If you have any credit left over after it reduces your tax owed to zero, you'll receive a refund for up to 40% of the total credit. The Lifetime Learning credit isn't refundable. It can bring any tax you might owe down to zero, but the IRS will keep the rest. The American Opportunity credit is primarily geared toward four-year degree programs. The student must also have no felony drug convictions. Having a felony conviction also does not preclude a student from qualifying for the Lifetime Learning credit. Frequently Asked Questions (FAQs) How many times can you claim the Lifetime Learning credit? Unlike the American Opportunity credit, there is no limit on the number of times someone can claim the Lifetime Learning credit. Someone can claim it as many years as they have qualified expenses. Where does the Lifetime Learning credit go on Form 1040? The Lifetime Learning credit goes on line 29 of Form 1040 alongside all other Form 8863 credits like the American Opportunity credit. Updated by Jess Feldman Jess Feldman Jess Feldman has been writing and editing for over five years, and currently focuses on financial topics. As an associate editor on the special projects team, she writes, edits, and develops tentpole brand projects across a variety of platforms. Since joining the financial space, she's developed an interest in finding ways to make the complex topic of finance relatable to younger generations, specifically via TikTok. Jess has a journalism degree from the University of Maryland Philip Merrill College of Journalism. learn about our editorial policies Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. IRS. "Instructions for Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits)." IRS. "What Is an Eligible Educational Institution?" IRS. "Qualified Education Expenses." IRS. "Publication 970 Tax Benefits for Education: Adjustments to Qualified Education Expenses," Pages 25–27. IRS. "Education Credits AOTC LLC." IRS. "Education Credits: Questions and Answers." IRS. "Publication 970 Cat. No. 25221V Tax Benefits for Education." IRS. "American Opportunity Tax Credit."