Lifetime Learning Credit FAQs

What is the Lifetime Learning Credit?
The Lifetime Learning Credit is a federal income tax credit for qualified tuition and expenses of eligible post-secondary schools.  The scholarship is available on a per taxpayer basis for qualified tuition and expenses of the taxpayer, the taxpayer's spouse, and eligible dependents listed as exemptions on the taxpayer's federal income tax return.

What is an “eligible dependent”?
A taxpayer may claim a dependency exemption for his/her unmarried child if:
1) the taxpayer supplies more than half of the child’s support for the taxable year, and
2) the child is under age 19 or a full-time student under age 24

The credit amount claimed is equal to 20% of the first $10,000 spent on qualified tuition and related expenses, for all students in the family, to a maximum of $2,000 per taxpayer.  However, the credit cannot reduce the tax liability below $0.

How does taxpayer income level affect the Lifetime Learning Credit?

The Life Time Learning Credit scholarship is gradually reduced to $0 according to the taxpayer’s modified adjusted gross income.

What is Modified Adjusted Gross Income?
MAGI is a taxpayer’s adjusted gross income plus any amount excluded from gross income under Sections 911, 931, or 933.  These sections of the tax code pertain to income earned abroad, including Puerto Rico.

How does a taxpayer claim the Lifetime Learning Credit Scholarship?
To claim the Lifetime Learning Credit, a taxpayer must file IRS Form 8863 with his/her federal income tax return.