WHAT IS the Lifelong Learning Credit
The Lifelong Learning Credit (LLC) is a provision of the United States federal income tax code that allows parents and students to reduce their tax liability by up to $ 2,000 to help offset education expenses. higher. The credit corresponds to the money spent by parents or students on dollar-for-dollar tuition fees, up to the limit of $ 2,000.
This credit can be claimed year after year, without limit. However, it cannot be combined with Hope Credit or American Opportunity Credit in the same taxation year.
BREAKDOWN Lifelong Learning Credit
The Lifelong Learning Credit can be claimed when a student is enrolled in undergraduate, graduate or professional courses. The credit can also be used for courses related to specific professional skills.
In order to be eligible for LLC, a student must be enrolled at an institution that is considered eligible by the IRS. They must take higher education courses in order to obtain a diploma or a recognized diploma which provides or improves professional skills. Finally, they must be enrolled in an eligible establishment for at least one university period that began during the taxation year for which they are claiming the credit. The IRS defines the “academic period” as a semester, a quarter, a trimester, a summer session or any other period determined by the school.
Income Limits for LLC
In order to claim full credit, a taxpayer’s adjusted gross income (MAGI) cannot exceed $ 66,000 if he deposits as an individual. For taxpayers who produce jointly, the income must be less than $ 132,000. Individual taxpayers whose MAGI is less than $ 66,000 but more than $ 56,000 receive a reduced amount of the credit. In the case of a joint deposit, taxpayers whose MAGI is between $ 112,000 and $ 132,000 benefit from the reduced credit. Taxpayers whose MAGI exceeds $ 66,000, or $ 132,000 for joint tax filers, cannot claim the credit at all.
Other education related tax credits
The US government subsidizes higher education spending for individuals through a number of tax credits, tax deductions and tax-efficient savings plans. Each of these programs reduces the tax liability for students or their parents. Grants include the Lifetime Learning Credit, the American Opportunity Tax Credit, the tuition and fees deduction and 529 savings plans.
The American Opportunity Tax Credit (AOTC) is a credit specifically intended for educational expenses during the first four years of a student’s higher education. The maximum credit allowed each year is $ 2,500.
The tuition and fees deduction simply allows taxpayers to deduct up to $ 4,000 of their taxable income as eligible expenses when filing their income tax return. 529 savings plans help people save money for future tuition with a tax-efficient savings plan.
To help taxpayers understand which credits they are eligible for, the IRS provides an interactive application on its website.