Lifetime Learning Credit

Lifetime Learning Credit (LLC)

The Lifetime Learning Credit (LLC) is a U.S. federal tax credit that helps offset the cost of higher education by reducing your tax liability by up to $2,000 per tax return each year. It applies to qualified tuition and related expenses for undergraduate, graduate, and certain career-focused courses. The credit is nonrefundable — it can reduce taxes you owe but will not produce a refund.

Key points

• Value: 20% of the first $10,000 of qualified education expenses, up to $2,000 per tax return per year.
• Eligibility: Available for undergraduate, graduate, and professional degree courses and for courses to acquire or improve job skills.
• Frequency: No limit on the number of years you can claim the LLC.
• Refundability: Nonrefundable (cannot generate a refund).
• Interaction with AOTC: You cannot claim the Lifetime Learning Credit and the American Opportunity Tax Credit (AOTC) for the same student in the same year.

Who is eligible

To claim the LLC you must meet these conditions:
* The student is enrolled at an eligible educational institution (a postsecondary school that participates in federal student aid programs).
The student is taking higher-education courses toward a degree, certificate, or other recognized credential, or is enrolled in courses to improve or acquire job skills.
The student was enrolled for at least one academic period that began in the tax year (semester, trimester, quarter, summer session, etc.).
* Your modified adjusted gross income (MAGI) falls within the allowable range for the credit (see income limits below).

Qualified expenses

Qualified expenses generally include tuition and related enrollment fees required for enrollment. The Form 1098‑T (Tuition Statement) from the school shows amounts paid or billed and is used to determine eligible expenses. Check the form for accuracy and contact the school if information is incorrect.

Income limits and phaseout (example ranges)

The LLC is subject to MAGI phaseouts. For recent tax years the phaseout ranges have been:
* Full credit for single filers with MAGI up to $80,000 and joint filers with MAGI up to $160,000.
* Partial credit phases out above those amounts and is generally unavailable once MAGI reaches $90,000 (single) or $180,000 (joint).

(Consult the IRS or current tax-year guidance for the exact MAGI thresholds and any inflation adjustments.)

How to claim the credit

1. Obtain Form 1098‑T from the eligible educational institution. Verify the amounts reported.
2. Determine your qualified expenses using the 1098‑T and IRS rules.
3. Complete IRS Form 8863 (Education Credits) and attach it to your Form 1040 or 1040‑SR.
4. Do not claim both the LLC and the AOTC for the same student in the same tax year — choose the credit that provides the greater tax benefit.

How the LLC compares with the American Opportunity Credit (AOTC)

• AOTC: Available only for the first four years of undergraduate education; up to $2,500 per eligible student; partially refundable (up to $1,000 refundable). Multiple AOTCs may be claimed if you have multiple eligible students.
• LLC: Usable for undergraduate, graduate, and career courses; up to $2,000 per tax return (regardless of number of students); nonrefundable; no limit on years claimed.

Common questions

• How much is it worth? Up to $2,000 per tax return (20% of the first $10,000 of qualified expenses).
• How often can you claim it? There is no lifetime limit — you can claim it every year you qualify.
• Can parents claim it for a dependent? Yes. Parents who claim a child as a dependent may claim the LLC on their tax return, but the $2,000 limit applies per return, not per child.
• Does it expire? No — the LLC itself has no expiration; eligibility depends on current tax-law provisions.

Bottom line

The Lifetime Learning Credit is a flexible tax benefit for students and parents paying for higher education and job-training courses. It’s especially helpful for graduate students, part-time students, and those pursuing professional development. To claim it correctly, confirm qualified expenses with Form 1098‑T and file Form 8863 with your tax return. Compare the LLC to the AOTC each year to determine which credit offers the greater tax benefit for your situation.

Sources: Internal Revenue Service — Lifetime Learning Credit and Education Credits guidance.