Lifetime Learning Credit

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Lifetime Learning Credit

A direct, dollar-for-dollar reduction of one's tax liability for money spent on higher education. In order to be eligible for the lifetime learning credit, one must have modified adjusted gross income within the limits set by Congress and have a family member enrolled in at least one class at a college, university, technical school, or vocational training. The credit is worth up to $2,000 per year and is non-refundable. Generally speaking, one may not claim a lifetime learning credit if one paid for the class through a 529 plan or if it is deducted as a business expense. Notably, one does not need to pursue a degree in order to be eligible for the credit.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Lifetime learning credit.

You may qualify to claim a lifetime learning tax credit of up to $2,000 each year for qualified higher educational expenses for yourself, your spouse, or a dependent if your family's modified adjusted gross income falls within the annual limits that Congress sets. Those amounts tend to increase slightly each year.

The education must be one or more courses but doesn't have to be part of a degree- or certificate-granting program, though the tax credit can be used for undergraduate, postgraduate, or professional studies.

Even if you are paying for more than one person's education, you can take only one lifetime learning credit per year.

If you claim the credit while you're taking withdrawals from tax-free college savings plans such as a Section 529 plan or an education savings account (ESA), you'll have to plan carefully. Your withdrawals will lose their qualified status and be subject to tax and penalty if you use them to pay for the same expenses for which you claim the tax credit.

You can't take the credit, though, if you claim a tuition and fees deduction in calculating your adjusted gross income or deduct the amount as a business expense.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Lifetime Learning Credit

A nonrefundable credit equal to 20% of the first $10,000 of qualified higher education tuition and fees paid during the year on behalf of the taxpayer, his or her spouse, or his or her dependents. Students attending school in the Gulf Opportunity Zone may qualify for a credit of 40% of their expenses up to $4,000 for 2005 and 2006. See Form 8863.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
The personal credits--which consist of the child and dependent care credit (3); the credit for the elderly and the permanently and totally disabled (4); the qualified adoption credit; (5); the nonrefundable portion of the child tax credit (6); the Hope Scholarship and Lifetime Learning credits (7) (see Q 1438); the credit for elective deferrals and IRA contributions (the "saver's credit," which became permanent under PPA 2006 (8));
No comparable requirement exists for the Lifetime Learning Credit.
13767-12s, filed July 18,2013) claimed the Lifetime Learning Credit based on a six-page account summary statement received from her university as proof of her education credits.
A taxpayer is allowed a credit against the tax imposed for an amount equal to the sum of the Hope Scholarship Credit and the Lifetime Learning Credit. The Hope credit is limited to 100 percent of the first $1,000 and 50 percent cf the next $1,000 of qualified tuition and fees, amounting to a $1,500 credit for each child attending a post-secondary institution.
Back in 1997, the federal Taxpayer Relief Act provided for the Hope Scholarship and Lifetime Learning Credits as a means of opening the doors of college to a new generation, with the largest investment in higher education since the 1956 G.I.
Implications: Eligible nonrefundable personal tax credits include the dependent care credit, the credit for the elderly and disabled, the adoption credit, the child credit, the credit for interest on certain home mortgages, the Hope scholarship and lifetime learning credits, the credit for savers, the credit for certain nonbusiness energy property, the credit for residential energy-efficient property, and the DC first-time homebuyer credit.
For example, while most community colleges don't charge much more than $2,000 for tuition, only families that spend more than $10,000 a year on tuition get full benefit from the Lifetime Learning Credit, she said.
He can also take advantage of the academic costs he is incurring by using the $2,000 Lifetime Learning Credit available to graduate students beyond the first two years of college or professionals attending classes parttime to improve or upgrade their job skills.
New rules also allow a taxpayer to claim a Hope credit or lifetime learning credit for the same year they use the education savings account provided the distribution is not used for the same education expenses for which a credit was claimed.
Lifetime Learning Credit While the American Opportunity Tax Credit allows a credit for qualified education expenses for the first four years of college, the Lifetime Learning Credit (under IRC section 25A) allows a credit for undergraduate, graduate, and job skills courses.
A taxpayer may claim a Hope or lifetime learning credit for a tax year and exclude from income amounts distributed from QTPs on behalf of the same student, as long as the distribution is not used for the same expenses.
Generally taxpayers may claim a Hope Credit of $1,500 (adjusted to $1,650 in 2006) and a Lifetime Learning Credit of $2,000.

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