Students who didn’t receive financial aid for college may qualify for the Lifetime Learning Credit. Also known as an education credit, the Lifetime Learning Credit is one of two credits available to students and their parents. The credit is designed to offset costs incurred at postsecondary institutions, by reducing the borrower’s (or guardian’s) income tax. The credit is a nonrefundable credit that cannot be taken as a refund if the family tax is zero.
Through the Lifetime Learning Credit, the student or parent can save up to $1,000 per year in federal taxes. The credit totals 20 percent on the first $10,000 paid toward higher education expenses. There is no limit on how many years the credit can be claimed as long as the filer (or dependant) received financial aid for college during that tax year.
The credit only applies to tuition and fees incurred for school. To qualify, the student or parent need only pay for some or all of the education-related expenses. However, student activity fees, athletic fees, and other miscellaneous expenses do not apply to the credit. Students who receive financial aid for college – such as grants and scholarships – will have a reduced credit.
Eligibility for the Lifetime Learning Credit also depends on the taxpayer’s modified adjusted gross income. For individuals filing single, the AGI must range between $40,000 and $50,000. Married and filing jointly couples cannot have a combined income of $80,000 to $100,000 in order to qualify.
Along with the Lifetime Learning Credit, there is the Hope Scholarship Credit. This tax credit mimics the Lifetime Credit. The main differences are the credit can only equal up to $1,500 per year and it can only be claimed for two years. The credit is good for 100 percent of the first $1,000 paid toward college expenses and an additional 50 percent of the second $1,000 paid. Again, any financial aid for college reduces the credit and the AGI’s are the same as the Lifetime Credit.
Through the Lifetime Learning Credit, the student or parent can save up to $1,000 per year in federal taxes. The credit totals 20 percent on the first $10,000 paid toward higher education expenses. There is no limit on how many years the credit can be claimed as long as the filer (or dependant) received financial aid for college during that tax year.
The credit only applies to tuition and fees incurred for school. To qualify, the student or parent need only pay for some or all of the education-related expenses. However, student activity fees, athletic fees, and other miscellaneous expenses do not apply to the credit. Students who receive financial aid for college – such as grants and scholarships – will have a reduced credit.
Eligibility for the Lifetime Learning Credit also depends on the taxpayer’s modified adjusted gross income. For individuals filing single, the AGI must range between $40,000 and $50,000. Married and filing jointly couples cannot have a combined income of $80,000 to $100,000 in order to qualify.
Along with the Lifetime Learning Credit, there is the Hope Scholarship Credit. This tax credit mimics the Lifetime Credit. The main differences are the credit can only equal up to $1,500 per year and it can only be claimed for two years. The credit is good for 100 percent of the first $1,000 paid toward college expenses and an additional 50 percent of the second $1,000 paid. Again, any financial aid for college reduces the credit and the AGI’s are the same as the Lifetime Credit.
