Taxes Tax Credits & Deductions How To Claim the Lifetime Learning Tax Credit By William Perez Updated on January 9, 2023 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 In This Article View All In This Article How Much Is the Credit Worth? Eligible Educational Institutions Qualified Expenses Who Can Claim the Education Credits? Income Limitations 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. Key Takeaways You can claim this credit for any borrowed funds, but not for costs that were covered by a scholarship or grant. You can't claim the Lifetime Learning tax credit if you're a dependent, but your parents can claim it if they're covering your educational costs. You can't claim the Lifetime Learning tax credit and the American opportunity tax credit for the same student, in the same year. How Much Is the Credit Worth? 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. You don't have to reduce them if you pay college tuition using borrowed funds. You also don't have to reduce qualifying expenses by the amount of any gift or inheritance you receive. 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. 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. Note To claim the Lifetime Learning credit, file IRS Form 8863 with your tax return. Completing Parts II and III of this form will help you figure out the amount of credit you can claim. 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 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 jointly), you can't claim the credit. 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 tax credit is a maximum of $2,500. The Lifetime Learning credit is a maximum of $2,000. Taxpayers typically only claim the Lifetime Learning credit when they cannot claim the American Opportunity credit. For example, having a felony conviction does not keep a student from qualifying for the Lifetime Learning credit. 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. American Opportunity Tax Credit The American Opportunity tax credit is a maximum of $2,500, but up to $1,000 of the credit is refundable. 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. 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? You should add the Lifetime Learning credit on line 3 of your Form 1040 or 1040-SR. You should also complete form 8863 and submit it with your Form 1040 or 1040-SR. Updated by Jess Feldman 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. "Lifetime Learning Credit." 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." IRS. "Education Credits AOTC LLC." IRS. "Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)." IRS. "Education Credits: Questions and Answers." IRS. "American Opportunity Tax Credit." IRS. "Compare Education Credits."