Achieve your long term educational goals with lifetime learning tax credit
The lifetime learning tax credit is available to taxpayers who file their return of income and owe taxes. It is a tax credit, and not a deduction.
Criteria for eligibility
You need to fulfill all of the following conditions in order to be eligible to claim the lifetime learning credit –
If you are planning to continue your education for a long time, this tax credit comes to your help. A family can claim up to $2,000 every year towards this credit. The credit is limited to 20 per cent of first $10,000 of educational expenses. The specialty of this credit is – it is available for all the years of post-secondary education and thereafter for any number of years. It is even available for courses taken up to acquire or improve your job skills. The only condition is you should file a tax return and owe some tax to claim this credit.
Taxpayers with a modified adjusted gross income (MAGI) above $58,000 ($116,000 for married filing jointly) are not eligible to claim lifetime learning credit. The limits are increased by $1,000 ($2,000 for married filing jointly) in the year 2008.
If you are enrolled for an undergraduate or graduate degree program or enrolled for a course of instruction to acquire/improve your job skills, you qualify for this credit.
How to get it?
The educational institutions have to send details of tuition fees in the form 1098-T to the students as well as to the IRS before January 31, 2009. This statement also includes contact information at the institution in case any student has any question about the form. Sometimes it may be advisable to speak to a tax consultant for calculations of tax credit.
The lifetime learning tax credit is available for the expenses paid in 2008 for the enrolment during 2008 or for any course beginning before March 31, 2009. So if you have paid $1,800 on December 20, 2008 for a course commencing on March 1, 2009, this amount qualifies for lifetime learning tax credit for the tax year 2008.
Can you claim multiple benefits?
You cannot claim the benefits of lifetime learning credit and hope credit. You have to select one out of these two. Generally for the first two years of your post-school education, you should go for hope credit. However for subsequent years you have to go for lifetime learning credit. A family can claim both these credits for different family members in the same year. However the family cannot exceed the limit of lifetime learning credit for one year, which is $2,000.
There are some special features of the lifetime learning credit. It is allowed for more than one course at the same time. Also there is no limitation on how many years the taxpayer can take this credit. You can go on claiming this credit even for your lifetime! The only restriction is – if the modified adjusted gross income (MAGI) exceeds the qualifying limits, the credit gets reduced or eventually eliminated. You cannot claim this credit by paying the fees in advance. The only exception is, you can pay fees and using a calendar year in order to cover academic period commencing before March 31 of the following year. If a student has a felony drug conviction, he’s not eligible to claim the hope credit but such rule does not exist for the lifetime learning credit.
Remember, if you are paying your tuition fees out of a tax free scholarship, then this credit is not available to you. If you are married and filing separately, you cannot claim this credit.
Criteria for eligibility
You need to fulfill all of the following conditions in order to be eligible to claim the lifetime learning credit –
- You are paying tuition fees and related expenses for your higher education
- You are an eligible student.
- You are claiming the credit for yourself, your spouse or for a dependent. So either the parent or the child can claim lifetime learning credit.
If you are planning to continue your education for a long time, this tax credit comes to your help. A family can claim up to $2,000 every year towards this credit. The credit is limited to 20 per cent of first $10,000 of educational expenses. The specialty of this credit is – it is available for all the years of post-secondary education and thereafter for any number of years. It is even available for courses taken up to acquire or improve your job skills. The only condition is you should file a tax return and owe some tax to claim this credit.
Taxpayers with a modified adjusted gross income (MAGI) above $58,000 ($116,000 for married filing jointly) are not eligible to claim lifetime learning credit. The limits are increased by $1,000 ($2,000 for married filing jointly) in the year 2008.
If you are enrolled for an undergraduate or graduate degree program or enrolled for a course of instruction to acquire/improve your job skills, you qualify for this credit.
How to get it?
The educational institutions have to send details of tuition fees in the form 1098-T to the students as well as to the IRS before January 31, 2009. This statement also includes contact information at the institution in case any student has any question about the form. Sometimes it may be advisable to speak to a tax consultant for calculations of tax credit.
The lifetime learning tax credit is available for the expenses paid in 2008 for the enrolment during 2008 or for any course beginning before March 31, 2009. So if you have paid $1,800 on December 20, 2008 for a course commencing on March 1, 2009, this amount qualifies for lifetime learning tax credit for the tax year 2008.
Can you claim multiple benefits?
You cannot claim the benefits of lifetime learning credit and hope credit. You have to select one out of these two. Generally for the first two years of your post-school education, you should go for hope credit. However for subsequent years you have to go for lifetime learning credit. A family can claim both these credits for different family members in the same year. However the family cannot exceed the limit of lifetime learning credit for one year, which is $2,000.
There are some special features of the lifetime learning credit. It is allowed for more than one course at the same time. Also there is no limitation on how many years the taxpayer can take this credit. You can go on claiming this credit even for your lifetime! The only restriction is – if the modified adjusted gross income (MAGI) exceeds the qualifying limits, the credit gets reduced or eventually eliminated. You cannot claim this credit by paying the fees in advance. The only exception is, you can pay fees and using a calendar year in order to cover academic period commencing before March 31 of the following year. If a student has a felony drug conviction, he’s not eligible to claim the hope credit but such rule does not exist for the lifetime learning credit.
Remember, if you are paying your tuition fees out of a tax free scholarship, then this credit is not available to you. If you are married and filing separately, you cannot claim this credit.
