By SAMANTHA KENNEDY
Extension Director
It’s that time again…tax time! As we all prepare our returns for the current tax season, we may be looking for credits that can help us possibly reduce our tax liability.
The Lifetime Learning Credit is a tax credit offered by the United States federal government to help taxpayers offset the costs associated with higher education and certain skill development courses.
Unlike some other education tax credits, the Lifetime Learning Credit is available for an unlimited number of years and is not restricted to undergraduate students. It is intended to support individuals pursuing post-secondary education, including graduate and professional degree programs, as well as courses to acquire or improve job skills.
Some of the key features of the Lifetime Learning Credit include:
Credit amount. The Lifetime Learning Credit allows eligible taxpayers to claim a tax credit of up to $2,000 per tax return. The credit amount is calculated as 20% of the first $10,000 of qualified education expenses paid for all eligible students.
Eligible expenses. Qualified education expenses for the Lifetime Learning Credit include tuition, fees, and required course materials that are necessary for enrollment or attendance at an eligible educational institution. However, expenses for room and board, transportation, and non-essential supplies are generally not eligible for the credit.
Income limits. The Lifetime Learning Credit begins to phase out for taxpayers with modified adjusted gross incomes (MAGI) above certain thresholds. For the current tax year, the phase-out range starts at $80,000-$90,000 for single filers and $160,000-$180,000 combined income for joint returns. Taxpayers with MAGI exceeding these thresholds may still be eligible for a reduced credit amount, depending on their specific circumstances.
Non-refundable credit. It is important to note that the Lifetime Learning Credit is a non-refundable credit, meaning it can only be used to offset federal income tax liabilities. If the amount of the credit exceeds the taxpayer’s tax liability, the excess credit cannot be refunded.
Documentation and recordkeeping. Taxpayers claiming the Lifetime Learning Credit must maintain accurate records and documentation of their qualified education expenses, including receipts, invoices, and statements from the educational institution. Providing adequate documentation is essential to support the claim in case of an audit by the Internal Revenue Service (IRS).
Overall, the Lifetime Learning Credit provides valuable financial assistance to individuals pursuing higher education and skill development opportunities. By offsetting a portion of the expenses associated with post-secondary education, the credit helps make education more accessible and affordable for taxpayers across diverse backgrounds and life stages.
For more information about this and other available tax credits, please contact Samantha Kennedy, County Extension Director, at 850.926.3931.
