Financial Aid

Lifetime Learning Credit

A Tax Credit for Students

The following information was prepared to inform students about the benefits and requirements for the Lifetime Learning Credit. It is based upon our understanding of the provisions contained in the Tax Relief Act of 1997 and should not be considered an official document. Students should rely upon the advice of their tax accountant or the Internal Revenue Services as appropriate.

What is the Lifetime Learning Credit?

The Lifetime Learning Credit is a non-refundable tax credit that could reduce federal income taxes for taxpayers by up to 20 percent of the first $5,000 out-of-pocket qualified tuition and fees paid for all eligible students in a taxpayer's family.

Who is eligible?

A taxpayer paying qualified tuition and fees at a postsecondary educational institution may claim the credit. Students are not required to take more than one course and both undergraduate and graduate level qualified tuition fees from eligible institutions can be included.

When does it take effect?

The Lifetime Learning Credit applies to expenses paid starting July 1, 1998 for education in academic periods beginning after that date.

What items are included in the tax credit?

Only tuition and enrollment fees for courses taken at eligible institutions are included---not books, housing costs, or other living expenses.

Is the tax credit affected by financial aid?

The amount of qualified tuition and fees is reduced by certain grant and scholarship aid. Other reductions may apply.

Are there other restrictions?

Yes. A taxpayer may not take both a Hope Scholarship Tax Credit and Lifetime Learning Credit for the educational expenses of the same student. The per taxpayer credit limit per year for the Lifetime Learning Credit is $1,000 (20% of the first $5,000 of expenses for all eligible students in the taxpayer's family). The tax credit phases out for joint taxpayers with income between $50,000 and $100,000. See the IRS web site for additional requirements.

How do I apply for the tax credit?

Eligible taxpayers will claim the credit when they file their 1999 federal income tax forms in 2000.

Where else can I get information about the Lifetime Learning Tax Credit?

• Check the IRS web site at www.ustreas.gov/prod/hot/not97-60.edu

• Contact your personal tax advisor