question.jpgIn Federal Income Tax

How do I claim the lifetime learning credit?

If you paid qualified tuition expenses for an eligible student during the tax year, you use Form 8863 to calculate the lifetime learning credit you may be entitled to claim, and you should then attach that form to your tax return. Unlike with the Hope credit, it does not matter how large the student’s course load is, nor does it matter if the student is enrolled in a degree program. Also unlike the Hope credit, you can claim the lifetime learning credit even if you have taken it for the same student two or more times. However, you cannot claim the credit if you are claiming the Hope credit for that same student - you may claim one or the other, but not both.

The amount of the credit you can claim for the 2006 tax year is up to $2,000 of qualified tuition expenses. More specifically, you can claim 20% of the first $10,000 paid for tuition. So if you paid $8,000 of tuition, the lifetime learning credit you could claim would be $1,600. Remember, however, that if your modified adjusted gross income is above a certain amount, a phaseout applies, further limiting the amount you can take for the lifetime learning credit.

Finally, you can only claim a total lifetime learning credit of $2,000 for all students, collectively. This differs from the Hope credit, because you can claim a Hope credit of up to $1,650 for each student. For example, if you have three students eligible for both credits, your lifetime learning credit would be limited to $2,000, but you could claim a Hope credit of up to $4,500.