The lifetime learning credit (LLC)

A tax credit worth up to $2,000 of your expenses for college tuition and other career development courses

Derek Silva

Derek Silva

Published March 17, 2020

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KEY TAKEAWAYS

  • The LLC is available for certain expenses (primarily tuition) you incur for a school degree or for a class to acquire and improve job skills

  • There’s no limit on how many years a taxpayer can claim the lifetime learning credit

  • The maximum annual LLC is $2,000 but you need at least $10,000 of expenses to get the maximum

  • Your income must be within income limits to qualify: $138,000 for joint filers and $69,000 for all others in 2020 (up from $136,000 and $68,000 in 2019)

The lifetime learning credit, or LLC, is a tax break for taxpayers with education expenses during the year. This mostly covers tuition but includes other fees and costs you have to pay in order to enroll in a class or program, as long as you pay those costs directly to the school or program administrator.

Unlike other education tax credits, the LLC covers the cost of classes that help you to improve your job skills or learn new job skills. You do not need to be in a degree program to claim the LLC. However, most accredited postsecondary institutions do qualify.

The lifetime learning credit is worth a maximum of $2,000 per tax return but you need to have at least $10,000 of expenses to be eligible for the full deduction ($20,000 if you file a joint tax return). You also need to fall within the income limits to claim this credit. For 2020, your income must be $69,000 or less ($138,000 for joint filers) to claim even a partial credit, up from $68,000 ($136,000 for joint filers) in 2019.

Claiming the LLC is relatively simple. You complete Form 8863, which also covers the American opportunity tax credit (AOTC), and any relevant parts of Schedule 3. Learn more about filing your taxes in 2019 and 2020 with our guide on how to file income taxes. Note that you can claim both the AOTC and the LLC on a single tax form, but only one for each eligible student.

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Expenses that qualify

The LLC is only available for qualified education expenses. There is no limit to how many years you can claim these expenses, but there are only two main qualifying expenses for the LLC:

  • Tuition
  • Fees you are required to pay in order to enroll in a program or class

As a rule, you cannot claim an expense for the lifetime learning credit unless you need to pay it in order to take part in a program. For example, some career development courses include the price of a textbook in the cost for the class and you cannot separate those costs. Some universities also require certain student activity fees. An expense also qualifies only if you pay it directly to the educational institution or the company running the course.

Notably, the lifetime learning credit also covers your expenses for career development classes and other classes to learn or improve your job skills. You don’t need to be pursuing a degree. You can also include expenses that you paid during the tax year, or within the first three months of the next tax year. The only caveat is that the class or academic period (semester, quarter, summer session, etc.) must have started within that time.

Make sure to keep a record of all your expenses. Colleges and some other programs will probably send you a copy of Form 1098-T, Tuition Statement, listing your tuition payments. You should also hold onto receipts, particularly ones that clearly show you paid expenses directly to the educational institution.

You cannot claim room and board costs, transportation, medical expenses like student health fees, or other nonessential school fees. (If take out a student loan to cover those expenses, you can at least claim the student loan interest deduction.)

Educational institutions that qualify

Your educational expenses must be spent at an eligible institution to qualify, but that does include the majority of accredited universities, colleges, and trade schools. It also includes public, private, nonprofit, and for-profit institutions. To see if your institution qualifies, ask someone in the financial aid department if it’s an eligible educational institution for tax purposes. There’s also a good chance it would be on the Free Application for Federal Student Aid (FAFSA) code list if it’s eligible.

How much is the lifetime learning credit?

The maximum lifetime learning credit for an individual tax year is $2,000 per tax return. Note that you can claim what you spent for yourself, a spouse, or a dependent, but you can only get a credit of up to $2,000 per year.

Your exact credit is calculated as 20% of your first $10,000 of qualified education expenses, which means you need to spend at least $10,000 ($20,000 for joint filers) on eligible expenses in order to get the full LLC.

The lifetime learning credit is not a refundable tax credit. So if the credit brings the amount of tax you owe for the year below $0, you will not get a refund for the excess credit. For example, if you owe $1,000 of income tax for the year and then you qualify for a $1,500 credit, you simply owe nothing and will not get a refund for the extra $500. However, you may be able to get a refund by claiming another education credit, the American opportunity tax credit (AOTC), instead of the LLC.

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Lifetime learning credit income limits

To claim the full LLC, your income needs to fall within certain income limits. Above those limits, the maximum credit you can get begins to phase out and then eventually you don’t qualify for any credit. The income limits vary based on your filing status and your modified adjusted gross income, which is your total annual income minus certain deductions.

2019 lifetime learning credit income limits

The 2019 LLC income limit applies to taxes you paid in 2019. You’ll file a tax return for these taxes by July 15, 2020. _(Normally, the deadline to file your taxes falls on April 15, but due to the coronavirus (COVID-19) outbreak, the Trump administration has extended the deadline to July 15.)

Filing statusMaximum income for full creditMaximum income for partial credit
Single$58,000$68,000
Head of household$58,000$68,000
Married, filing jointly$116,000$136,000
Married, filing separately$58,000$68,000
Qualified widow(er)$58,000$68,000

2020 lifetime learning credit income limits

The 2020 LLC income limit applies to taxes you’ll pay this year. You’ll file a tax return for these taxes in early 2021.

Filing statusMaximum income for full creditMaximum income for partial credit
Single$59,000$69,000
Head of household$59,000$69,000
Married, filing jointly$118,000$138,000
Married, filing separately$59,000$69,000
Qualified widow(er)$59,000$69,000

If your income is too high for the LLC, you may still qualify for the AOTC or the tuition and fees deduction. Learn more about these and other common tax deductions.

Although you have more time to file your taxes in 2020, Policygenius recommends filing your taxes as early as you can, not only to make use of your refund sooner but also to give yourself more time to pay your taxes should you have a bill.

How to claim the LLC

You can claim the lifetime learning credit by filling out Form 8863, Education Credits. The form requires you to write your school’s employer identification number (EIN), so you may need to ask for that EIN if you don’t already have it. Then you should also complete Schedule 3, Additional Credits and Payments. Not all parts of it will apply to you, so you only need to fill out the lines that do. Finally, attach both forms to your Form 1040.

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