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previous page Previous Page: Publication 970 - Tax Benefits for Education - Who Can Claim a Dependent's Expenses
next page Next Page: Publication 970 - Tax Benefits for Education - Claiming the Credit
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p970-015.htm#en_us_publink100020858

Figuring the Credit(p24)


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The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. The maximum amount of lifetime learning credit you can claim for 2008 is $2,000 (20% × $10,000). However, that amount may be reduced based on your modified adjusted gross income (MAGI). See Effect of the Amount of Your Income on the Amount of Your Credit on this page.
taxmap/pubs/p970-015.htm#en_us_publink1000120095

Students in Midwestern disaster areas.(p24)
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For students in Midwestern disaster areas, the credit rate is modified to 40% of qualified expenses paid, with a maximum lifetime learning credit allowed on your return of $4,000. If you are claiming a lifetime learning credit for both students in a Midwestern disaster area and other students, the qualified education expenses taken into account for other students cannot exceed $10,000 reduced by the qualified education expenses of the students in the Midwestern disaster areas.
taxmap/pubs/p970-015.htm#en_us_publink1000118187

Example.(p24)

Bruce and Toni Harper are married and file a joint tax return. For 2008, their MAGI is $75,000. Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. The college is not in a Midwestern disaster area. She already has a bachelor's degree in history and wants to become a nurse. In August 2008, Toni paid $6,000 of qualified education expenses for her Fall 2008 semester. Bruce and Toni can claim a $1,200 (20% × $6,000) lifetime learning credit on their 2008 joint tax return.
taxmap/pubs/p970-015.htm#en_us_publink100020860

Form 1098-T.(p24)


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To help you figure your lifetime learning credit, you should receive Form 1098-T. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by February 2, 2009. An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. However, the amounts in boxes 1 and 2 of Form 1098-T may be different than what you actually paid. When figuring the credit, use only the amounts you paid or were deemed to have paid in 2008 for qualified education expenses.
In addition, your Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether you were enrolled at least half-time or were a graduate student.
The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number.
taxmap/pubs/p970-015.htm#en_us_publink100020861

Effect of the Amount of Your Income on the Amount of Your Credit(p24)


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previous topic occurrence Effect of the Amount of Your Income on the Amount of Your Credit next topic occurrence

The amount of your lifetime learning credit is phased out (gradually reduced) 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 lifetime learning credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return).
taxmap/pubs/p970-015.htm#en_us_publink100020862

Modified adjusted gross income (MAGI).(p24)


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For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return.
taxmap/pubs/p970-015.htm#en_us_publink100020863

MAGI when using Form 1040A.(p24)
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If you file Form 1040A, your MAGI is the AGI on line 22 of that form.
taxmap/pubs/p970-015.htm#en_us_publink100020864

MAGI when using Form 1040.(p24)
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If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any:
  1. Foreign earned income exclusion,
  2. Foreign housing exclusion,
  3. Foreign housing deduction,
  4. Exclusion of income for bona fide residents of American Samoa, and
  5. Exclusion of income for bona fide residents of Puerto Rico.
You can use Worksheet 3-1 to figure your MAGI.
taxmap/pubs/p970-015.htm#en_us_publink1000118368
Pencil

Worksheet 3-1. MAGI for the Lifetime
Learning Credit

1.Enter your adjusted gross income
(Form 1040, line 38)
 1.            
2.Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 2.              
3.Enter your foreign housing deduction (Form 2555, line 50) 3.              
4.Enter the amount of income from Puerto Rico you are excluding 4.              
5.Enter the amount of income from American Samoa you are excluding (Form 4563, line 15) 5.              
6.Add the amounts on
lines 2, 3, 4, and 5
 6.            
7.Add the amounts on lines 1 and 6.
This is your modified adjusted
gross income
. Enter this amount
on Form 8863, line 9
 7.            
taxmap/pubs/p970-015.htm#en_us_publink1000120096

Phaseout.(p24)


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If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 7–13 of Form 8863. The same method is shown in the following example.
taxmap/pubs/p970-015.htm#en_us_publink100020866

Example.(p24)

You are filing a joint return with a MAGI of $106,000. In 2008, you paid $6,600 of qualified education expenses.
You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). The result is a $1,320 (20% x $6,600) tentative credit.
Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. The numerator of the fraction is $116,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator is $20,000, the range of incomes for the phaseout ($96,000 to $116,000). The result is the amount of your phased out (reduced) lifetime learning credit ($660).
 $1,320×$116,000 − $106,000
$20,000
=$660 
previous pagePrevious Page: Publication 970 - Tax Benefits for Education - Who Can Claim a Dependent's Expenses
next pageNext Page: Publication 970 - Tax Benefits for Education - Claiming the Credit
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication