Tax Insights

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Education Expenses Overwhelming? Try the Lifetime Learning Credit

If you, your spouse, or dependents are currently attending or planning to attend college, you may be able to claim the Lifetime Learning Credit to help offset the cost. Just remember that you cannot claim both the Lifetime Learning Credit and the American Opportunity Credit for the same student in the same year.

Lifetime Learning Credit

There is no limit on the number of years the Lifetime Learning Credit can be claimed for each student.

Eligible institutions. The credit is available for any post-high school education (including graduate-level courses and courses to acquire or improve job skills) at an eligible school. That includes accredited schools offering credit towards a bachelor’s or associate’s degree or other recognized post-high school credential and certain vocational schools. The credit may be available even if only one course is taken.

Qualified tuition and related expenses. This includes tuition and academic fees required for enrollment or attendance. Student activity fees, athletic fees, insurance, books, room and board, transportation costs, or other personal living expenses do not qualify. Courses involving sports, games, or hobbies do not qualify unless they’re part of the student’s degree program.

Maximum credit. You can claim $2,000 per year. The credit is per taxpayer, not per student, which means a family’s maximum credit is the same regardless of the number of students in the family.

Nonrefundable. The credit can reduce your regular tax bill and your alternative minimum tax (AMT) bill to zero, but it can’t result in a refund.

Phase-out ranges for modified AGI. In tax year 2014, for married couples filing jointly: $108,000 to $128,000, and it is unavailable if AGI is $128,000 or more. For single taxpayers or heads of household: $54,000 to $64,000. Married couples who file separately cannot claim the credit.

By Melinda Nelson, CPA

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