How the Lifetime Learning Credit works
There are a few key aspects to keep in mind when claiming the LLC:
- This credit reduces your federal income tax dollar for dollar, but it won’t result in a refund.
- Eligible expenses are limited to $10,000.
- You can claim up to 20% of the $10,000 maximum.
- The maximum applies per return for each tax year, not per student.
For example, let’s say you had $12,000 worth of expenses that fall into the qualifying categories for the LLC. You can only claim $10,000 of those expenses on your taxes, resulting in the maximum credit of $2,000.
Alternatively, if you had $4,000 in qualifying expenses, you could claim $800 for the LLC.
Who qualifies for the Lifetime Learning Credit
You can claim the LLC if:
- You, your spouse, or a dependent is enrolled at an eligible educational institution.
- The student takes at least one course during an academic period.
- Qualified education expenses were paid for the student.
- Your modified adjusted gross income (MAGI) is below the limit for your filing status.
Note: You can’t claim the LLC if you file married filing separately or someone else claims you as a dependent.
LLC income limits for tax years 2025 and 2026
Your filing status and MAGI determine how much you can claim.
| Filing status | Full credit | Partial credit | No credit |
|---|---|---|---|
| Single, head of household, or qualifying surviving spouse | $80,000 or less | More than $80,000 but less than $90,000 | $90,000 or more |
| Married filing jointly | $160,000 or less | More than $160,000 but less than $180,000 | $180,000 or more |
Source: Internal Revenue Service
Expenses: What does and doesn’t qualify
Qualified education expenses generally include:
- Tuition
- Fees required for enrollment or attendance
- Books, supplies, and equipment (only when they are required as a condition of enrollment or attendance)
You typically can’t include:
- Room and board
- Transportation
- Insurance
- Medical expenses
- Optional fees
- Expenses covered by tax-free scholarships, grants, or other educational assistance
Lifetime Learning Credit vs. the American Opportunity Tax Credit
The LLC and AOTC can both help cover education costs, but they differ in their eligibility rules, limits, and refundability. The table below compares the main differences:
| Feature | Lifetime Learning Credit | American Opportunity Tax Credit |
|---|---|---|
| Maximum credit | Up to $2,000 per tax return | Up to $2,500 per eligible student |
| Refundable? | No | Partially refundable, up to 40% |
| Years available | Unlimited | First four years of postsecondary education |
| Enrollment requirement | At least one course | At least half-time in a degree or credential program |
Source: Internal Revenue Service
How to claim the LLC
To claim the LLC, you’ll generally need Form 1098-T from the school and records showing the qualified expenses you paid. Use that information to complete Form 8863 and attach it to your federal tax return.
Note: You can’t claim both the LLC and the AOTC for the same student or same education expenses; however, it is possible to have both credits on the same return when there are multiple students.
