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Lifetime Learning Credit up to $2,000 Applies to All Years of Post-Secondary Education

The Lifetime Learning Credit is another option to consider when you pay qualified education expenses for post-secondary education. This credit is equal to 20% of the first $10,000 paid each year for qualified education expenses. Unlike the Hope Credit, the Lifetime Learning Credit is not limited to expenses paid for the first two years of post-secondary education. Also, if the Hope Credit is claimed for the student, the Lifetime Learning Credit might not be claimed.

How does the Lifetime Learning Credit work?

The Lifetime Learning Credit is allowed on a per-taxpayer, rather than a per-student basis. Using the triplet example from above and fast-forwarding to their senior year in college, if each of the triplets had qualified tuition expenses of $15,000 ($45,000 total), your credit would be capped at $2,000.

What are the income limitations?

In 2008, phase-out begins when a taxpayer's adjusted gross income (AGI) exceeds $48,000 for a single person and $96,000 on a joint return. The entire credit is phased out when AGI exceeds $55,000 for a single person and $110,000 on a joint return.

As for the Hope Credit, the Lifetime Learning Credit cannot be claimed by someone claimed as a dependent on another's return. If the taxpayer is eligible to be claimed by another taxpayer but is not so claimed, the taxpayer may take the credit.

For more information, contact Mike Calahan at 312-980-2996 or Tara Wells at 312-980-3277 for more information.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.