Lifetime Learning Credit
Lifetime Learning Credit
Financial relief for families of college students can come from an unexpected source. Tax filings that include a claim for a Lifetime Learning Credit can grant families or individuals up to $2,000 in tax credits if the education expenses fall within the qualified guidelines. How do you know if you qualify? Here are a few basics to get you started, and then follow up with your own research and advice from a tax professional if you are still unsure.
The claim for a Lifetime Learning Credit is filed with a regular tax return. It reduces the overall income that is able to be taxed. Any amount of money that a person pays towards higher education expenses can be considered as part of the claim. The maximum credit any tax return can qualify for is $2,000. If a parent is filing for multiple children in school, they file a single return with the students as dependents, and therefore the single return is limited to the $2,000.
Unlike the Hope Credit, that is only available for matriculated students in their freshman and sophomore years of school, the Lifetime Learning Credit applies to any course, any time. If you are considering taking a course or two to improve your current job skills, or just for general knowledge, it may qualify as a claim.
There are a few restrictions on those able to claim the credit too. Married students who file separately cannot claim the credit. If you qualify for the Hope credit as well, you must choose one or the other – not both – on the same year’s tax return. If you are claimed as a dependent on someone else’s tax return, you cannot file for the credit yourself. Only the person considered responsible for the majority of the expenses will qualify.
The other important restriction takes into account the filer’s Modified Adjusted Gross Income or MAGI. Those who claim $45,000 or less for their income will be granted the maximum amount of tax credits. As an income increases up through $55,000, the amount available to claim is proportionally lowered. In the case of married couples, the maximum income that can qualify is $110,000, and the total for the maximum credit is $90,000 combined. Married parents that plan to claim their child as their dependent and want to apply the Lifetime Learning Credit must also file jointly.
Students looking to complete a degree and professionals looking to improve their overall abilities are finding it easier to finance the higher education. The Lifetime Learning credit can be claimed every year, for as long as needed. Be sure to confirm with a tax professional that your specific situation falls within the required qualifiers, and go for that class you have always wanted to take at the community college.
More information on credit and credit card can be found at student credit cards for college students. Be sure to compare credit cards before applying.