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previous page Previous Page: Publication 970 - Tax Benefits for Education - Illustrated Example
next page Next Page: Publication 970 - Tax Benefits for Education - What Expenses Qualify
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taxmap/pubs/p970-011.htm#en_us_publink100020823

Chapter 3
Lifetime Learning Credit(p19)

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previous topic occurrence Lifetime Learning Credit next topic occurrence


What's New(p19)


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taxmap/pubs/p970-011.htm#en_us_publink100020825

Income limits increased.(p19)

The amount of your lifetime learning credit for 2008 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $48,000 and $58,000 ($96,000 and $116,000 if you file a joint return). You cannot claim a credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return). This is an increase from the 2007 limits of $47,000 and $57,000 ($94,000 and $114,000 if filing a joint return). See Effect of the Amount of Your Income on the Amount of Your Credit, later, for more information.
taxmap/pubs/p970-011.htm#en_us_publink100090964

Students in Midwestern disaster areas.(p19)

The following rules apply only to students attending an eligible educational institution in the Midwestern disaster areas in the states of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin. See Table 3-2 near the end of this chapter for a list of counties.

taxmap/pubs/p970-011.htm#TXMP7ae33ac9Introduction

There are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the Hope credit and the lifetime learning credit, also referred to as education credits. This chapter discusses the lifetime learning credit. The Hope credit is discussed in chapter 2.
This chapter explains:
taxmap/pubs/p970-011.htm#en_us_publink100020826

What is the tax benefit of the lifetime learning credit.(p19)


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For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas) for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The lifetime learning credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.
The lifetime learning credit you are allowed may be limited by the amount of your income and the amount of your tax.
Deposit
You may be able to take a tuition and fees deduction for your education expenses instead of a lifetime learning credit. You can choose the one that will give you the lower tax. See chapter 6 for details about the deduction.
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Can you claim both education credits this year.(p19)


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For each student, you can elect for any year only one of the credits. For example, if you elect to take the lifetime learning credit for a child on your 2008 tax return, you cannot, for that same child, also claim the Hope credit for 2008.
If you are eligible to claim the lifetime learning credit and you are also eligible to claim the Hope credit for the same student in the same year, you can choose to claim either credit, but not both. For 2008, if the total qualified education expenses for a student are more than $9,000, it will generally be to your benefit to claim the lifetime learning credit.
If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the Hope credit for one student and the lifetime learning credit for another student in the same year.
taxmap/pubs/p970-011.htm#en_us_publink100020829

Differences between the lifetime learning and Hope credits.(p19)


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There are several differences between these two credits. For example, you can claim the Hope credit based on the same student's expenses for no more than 2 years. However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. The differences between the two credits are summarized in Table 3-1.
taxmap/pubs/p970-011.htm#f25221v0301

Table 3-1. Comparison of Education Credits

Lifetime Learning CreditHope Credit
Up to $2,000 credit ($4,000 if a student in a Midwestern disaster area) per return Up to $1,800 credit ($3,600 if a student in a Midwestern disaster area) per eligible student
Available for all years of postsecondary education and for courses to acquire or improve job skills Available ONLY until the first 2 years of post-
secondary education are completed
Available for an unlimited number of years Available ONLY for 2 years per eligible student
Student does not need to be pursuing a degree or other recognized education credential Student must be pursuing an undergraduate degree or other recognized education credential
Available for one or more courses Student must be enrolled at least half time for at least one academic period beginning during the year
Felony drug conviction rule does not applyNo felony drug conviction on student's record
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Can You Claim the Credit(p20)


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The following rules will help you determine if you are eligible to claim the lifetime learning credit on your tax return.
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Who Can Claim the Credit(p20)


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Generally, you can claim the lifetime learning credit if all three of the following requirements are met.
Note.Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you.
"Qualified Education Expenses" are defined on this page. "Eligible students" are defined later under Who Is an Eligible Student. A "dependent for whom you claim an exemption" is defined later under Who Can Claim a Dependent's Expenses.
You may find Figure 3-1, on the next page, helpful in determining if you can claim a lifetime learning credit on your tax return.
taxmap/pubs/p970-011.htm#en_us_publink100020833

Who Cannot Claim the Credit(p20)


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You cannot claim the lifetime learning credit for 2008 if any of the following apply.
previous pagePrevious Page: Publication 970 - Tax Benefits for Education - Illustrated Example
next pageNext Page: Publication 970 - Tax Benefits for Education - What Expenses Qualify
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication