What Is the Maximum Amount of Lifetime Learning Credit That Can Be Claimed on a Tax Return?

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What Is the Lifetime Learning Revenue enhancement Credit?

Updated for Tax Year 2022 • October 16, 2022 02:05 AM

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OVERVIEW

With the ascension price of higher education, many taxpayers wonder how they tin offset some of their schoolhouse expenses. One option is to claim the Lifetime Learning credit on your federal income taxation return. This credit reduces your tax pecker on a dollar-for-dollar footing for a portion of the tuition, fees and other qualifying expenses you pay for yourself, a spouse or a dependent to enroll in school.

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Qualifying for the credit

In order to qualify for the Lifetime Learning credit, you must have made tuition and fee payments to a post-secondary school (after loftier school) during the year.

• You tin claim the credit for any post-secondary classes yous take; you don't have to be working towards a degree. Some limitations do be though.
• If you lot earn too much income during the year, you may not be eligible to claim the credit. However, this besides depends on your filing status.

Calculating your credit

The maximum credit you can claim is 20% of up to $10,000 in eligible costs or $ii,000.

• You can include the cost of tuition, fees and any books or supplies yous are required to purchase directly from the school, so long every bit information technology's a status of enrollment.
• For case, if your professor recommends that y'all purchase a textbook simply you can withal enroll in the class without 1, then you cannot include the toll of the textbook in the credit.

Claiming the credit

At the cease of the year, your educational institution should send you a Form 1098-T that reports your eligible costs. To claim the credit, enter those figures on Form 8863.

• When y'all gear up the class, you only need to complete parts iii and 6 to calculate the credit amount you are eligible for.
• Transfer the credit amount to your income revenue enhancement return.
• Be sure to attach Class 8863 to your tax return before sending to the IRS.

No double benefits allowed

You lot cannot claim the American Opportunity credit in the aforementioned year you merits the Lifetime Learning credit. The IRS merely allows one tax reduction per student, per year.

• Before claiming the Lifetime Learning credit, you should determine whether you qualify to accept the American Opportunity credit.
• For most students who are in i of their start four years of postal service-secondary teaching, the American Opportunity credit can provide greater tax savings.
• The maximum amount for the American Opportunity credit is $2,500.

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The above article is intended to provide generalized financial information designed to brainwash a broad segment of the public; information technology does not give personalized revenue enhancement, investment, legal, or other business and professional communication. Before taking any action, you should ever seek the assistance of a professional person who knows your particular situation for advice on taxes, your investments, the law, or whatsoever other business and professional matters that affect you and/or your business.

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Source: https://turbotax.intuit.com/tax-tips/college-and-education/what-is-the-lifetime-learning-tax-credit/L7jQozNpZ

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