What is the Lifetime Learning Tax Credit?The Lifetime Learning credit is a tax credit available to individuals who file a tax return and owe taxes. This means the amount of the credit is subtracted directly from a family's actual tax liability, rather than reducing taxable income like a tax deduction does. The Lifetime Learning credit is not refundable.
A family may claim a tax credit of up to $1,000 per tax year (until January 1, 2003) and $2,000 per tax year (after that date) for the taxpayer, taxpayer's spouse, or any eligible dependents for an unlimited number of tax years. A family may claim up to 20% of $5,000 of eligible expenses for expenses paid after June 30, 1998 and prior to January 1, 2003, and up to 20% of $10,000 of eligible expenses (for expenses paid after January 1, 2003 and after).
The actual amount of the credit depends on the family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. This credit is family-based (e.g., $1,000 per family) rather than dependent-based like the Hope credit.