The lifetime learning credit is a frequently overlooked tax break
that can help you pay for education expenses at several points in your life. You can claim the credit for undergraduate or graduate school costs, and you may even be eligible if you’re taking a continuing education class to improve your job skills.
The lifetime learning credit is worth up to $2,000 per tax return — reducing your tax liability dollar for dollar — and you can claim it for unlimited years. The IRS significantly increased the income limits a few years ago, and higher-income taxpayers may now qualify.
But many who qualify for this valuable tax break don’t know about it. Keep reading to discover if you’re eligible — and how to claim it if you are.
What Is the Lifetime Learning Credit?
The lifetime learning credit is a tax credit for eligible tuition and expenses at a qualified educational institution. It’s worth up to 20% of the first $10,000 of eligible expenses — or $2,000 — per return, not per student.
It’s not as valuable as the American opportunity tax credit, which can be worth up to $2,500 per student in the first four years of college. But the requirements for the lifetime learning credit are much less restrictive.
You can claim the lifetime learning tax credit for undergraduate or graduate school expenses beyond the first four years, and you can also claim it for continuing education or professional development classes you take to improve your job skills.
Unlike the AOTC, you don’t have to be enrolled at least part time in a program for a degree or other credential. If an eligible educational institution offers the class, you may be able to take the credit.
The definition of eligible institution is quite broad.
“This includes any college, university, vocational school or other postsecondary educational institution that participates in or is eligible to participate in a student aid program administered by the Department of Education,” says Brittany Benson, lead tax research analyst at The Tax Institute at H&R Block.
Who Can Claim the Lifetime Learning Credit?
There are four key requirements for claiming the lifetime learning tax credit:
— You, your dependent or a third party must pay qualified education expenses.
— You must incur expenses at an eligible institution.
— The student attending the program is you, a spouse or a dependent on your tax return.
— Your income must be below the cutoff.
You cannot claim the lifetime learning credit if someone claims you as a dependent on their tax return or if you file taxes as married filing separately.
[Read: Married Couples: Is It Better to File Taxes Jointly or Separately?]
Students whose parents claim them as dependents can’t claim the lifetime learning credit themselves.
“For the child to be able to claim the lifetime learning credit, they must not be claimed as a dependent on the parents’ tax return,” says Mark Luscombe, principal federal tax analyst with Wolters Kluwer Tax & Accounting.
“It is not enough that the child files his own tax return. The child must also not be claimed as a dependent on the parents’ tax return,” he adds.
The parents may be able to claim the credit for dependents, however.
“If the student is a dependent on their parents’ tax return, the parents will be able to claim the credit if the other rules are met,” Benson says. “The student must be the taxpayer, the taxpayer’s spouse (if married filing jointly) or the taxpayer’s dependent who is claimed on their return.”
[Read: Kids and Taxes: 6 Tax Credits Parents Should Know About]
How Much Is the Lifetime Learning Credit Worth?
The credit is worth up to 20% of the first $10,000 of eligible education expenses, or $2,000 per tax year. That limit is based on the tax return, not per student, and the credit is available for an unlimited number of tax years.
You can receive the full credit for tax year 2024 only if your modified adjusted gross income was below $80,000 as a single or head of household filer, or below $160,000 for married couples filing jointly.
You can claim a partial credit if your MAGI was between $80,000 and $90,000 if you file as single or head of household, or between $160,000 and $180,000 if you’re married and filing jointly.
The lifetime learning credit is nonrefundable, says Luscombe. That means the credit can’t reduce your tax liability below $0 for the year. This is different from the American opportunity credit, where 40% of the credit (up to $1,000) is refundable.
[Read: Educational Tax Credits and Deductions You Can Claim for Tax Year 2024]
What Expenses Does the Lifetime Learning Credit Cover?
You don’t have to be a full-time student and you don’t have to be pursuing a degree to claim the lifetime learning credit. Even continuing education, professional development or certificate programs can count if you take them at eligible institutions.
“It can be just one class at an eligible accredited higher education institution beyond high school if you are working toward undergraduate, graduate and professional degree courses — or to acquire or improve your skills for a job,” says Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax.
The school or other organization offering the course is important.
“You do not need to be degree seeking, but the classes need to be offered through an eligible educational institution,” says Mark Kantrowitz, a financial aid expert in the greater Chicago area.
“An eligible institution is any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit and proprietary (privately owned for profit) postsecondary institutions,” he says.
You can claim the lifetime learning credit for tuition, fees and required expenses.
“Generally all costs that are required to be paid to eligible educational institutions as a condition of the student’s enrollment are included as qualifying expenses,” Benson says.
“This can include expenses paid directly to the institution like supplies, equipment and other student fees, but it does not include books purchased from the school bookstore. Room and board, insurance, medical, transportation and other living expenses are not qualified expenses,” she says.
You’ll typically receive Form 1098-T from the eligible institution reporting the qualified expenses you paid. To claim the credit, complete IRS Form 8863. For more information, see IRS Publication 970 Tax Benefits for Education.
If you haven’t received Form 1098-T, it’s a good idea to keep evidence of tuition payments and receipts in case the IRS seeks some form of verification, Luscombe says.
How the Lifetime Learning Credit Works With Other Tax Breaks
You can’t claim the lifetime learning and American opportunity credit for the same student in the same tax year. And you can’t double dip and claim the lifetime learning credit for the same expenses as another tax break.
For example, if you’re using a tax-free 529 college savings account or employer educational reimbursement, you can’t claim the lifetime learning credit for the same costs.
You may be able to use 529 money for other eligible expenses that aren’t covered by the lifetime learning credit, such as room and board, if you’re enrolled at least half time in a program for a degree or other recognized educational credential.
For example, if you’re in graduate school at least half time and claiming the lifetime learning credit for your tuition and fees, you may be able to take 529 withdrawals for your room and board.
“A 529 plan can be used for room and board, rent, housing costs, meal plans, books, special services, computers and even repayment of student loans,” Benson says. “All of these are not eligible for the lifetime learning credit.”
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What to Know About the Lifetime Learning Credit originally appeared on usnews.com
Update 04/07/25: This story was published at an earlier date and has been updated with new information.
