2009 Lifetime Learning Credit - Tax Benefits for Education

The 2009 Lifetime Learning Tax Credit allows you to claim an educational tax credit for some qualified higher education expenses. While deductions can reduce the amount of income you have to pay taxes on, a tax credit can reduce your tax bill dollar for dollar. The Lifetime Learning Credit can be claimed for the a taxpayer, a taxpayer's spouse, or a taxpayer's qualified dependent.

The Lifetime Learning Tax Credit is a 20% tax credit for the first $10,000 of qualified educational expenses or up to $2,000 per year. For students in the Midwestern disaster areas the credit is doubled to 40% of the first $10,000 or up to $4,000 per year.

Eligible Students

• Taxpayer or taxpayer's spouse is eligible as long as the student is not claimed as a dependent on someone else's tax return.
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• Taxpayer's unmarried child is eligible, providing he or she is under age 19 ( or a full-time student under age 24), and the parent is providing at least half the support for the student during the tax year.
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• A eligible student must be enrolled in at least one class at an eligible institution. Eligible institutions include any college, university, vocational school, or other post-secondary educational institution that is eligible to participate in federal financial aid programs administered by the United States Department of Education.

Income Limits

• Single taxpayers can claim the Lifetime Learning Credit if their modified adjusted gross income (MAGI) is less than $60,000. A single taxpayer with a MAGI of $50,000 or less can claim the full credit. There is a phaseout for MAGI's of more that $50,000 but less that $60,000.
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• Married taxpayer's filing a joint return can claim the Lifetime Learning Credit if their MAGI is less than $120,000. Married taxpayer's filing jointly with a MAGI of $100,000 or less can claim the full credit. There is a phaseout for MAGI's of more than $100,000 and $120,000.

• Eligible Expenses include tuition for courses taken as part of degree program or for the purpose of improving job skills. Student activity fees, course related books, materials, suppliesm and equipment are also eligible expenses provided they are paid directly to the institution and are a condition or enrollment or course attendance.
  Non-Eligible Expenses include room and board, living expenses, meal plans, medical expenses, or transportation or travel expenses.
  Students in the Midwestern disaster areas are eligible to include reasonable room and board expenses as determined by the educational institutions standard room and board rates.

  Notes:

  • The Lifetime Learning Credit cannot be taken for the same student in the same year as the Hope Credit or the American Opportunity Credit. They could, however, each be taken for a different student in the same year.
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  • The Lifetime Learning Credit is calculated per family and not per student. The maximum deduction per taxpayer is $2,000 per year ($4,000 for student in Midwestern disaster areas) regardless of how many family members are enrolled in qualified higher learning institutions.
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  • The Lifetime Learning Credit does not require half-time enrollment. Enrollment in a single course and the related eligible fees qualify for the deduction.
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  • The 2009 Lifetime Learning Credit should be used for any eligible educational costs for courses that started in 2009 or will start in the first three months of 2010.
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  • The Lifetime Learning Credit is not restricted to any particular years of education, but can be used for any higher education course work that is part of a degree program or for the purpose of improving job skills.
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  • The Lifetime Learning Credit can be used for graduate or doctorate course work and the related qualified educational expenses.
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  • Students are not eligible to claim the Lifetime Learning Credit or any educational tax credit on their tax return if their parents claim them as a dependent
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  • The Lifetime Learning Credit can be claimed for an unlimited number of years.
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    The Lifetime Learning Credit allows taxpayers to claim a tax credit for qualified higher education learning expenses. Taxpayer's can deduct qualified educational expenses for themselves, their spouse, or their qualified children with a few simple forms.

    Sources:

    IRS Publication Tax Benefits for Education - Chapter 4 - Lifetime Learning Credit

    Turbo Tax - Sending Kids to College