Lifetime Learning Credit

For those who have two years of college under their belt and can't qualify for the Hope credit, the Lifetime Learning credit provides a smaller tax benefit for an unlimited number of years in which you took one or more postsecondary educational courses. The courses can apply toward an undergraduate, graduate, or professional degree, certificate program, or other academic credential. You can claim the credit for yourself, your spouse if filing jointly, and any dependents for whom you claim an exemption on your tax return.

This credit is worth 20 percent of the first $10,000 in higher education expenses per family. Therefore, the maximum amount of credit you can claim is $2,000. If one or more students in the family are eligible for the Hope credit, other family members may use the full $10,000 of the Lifetime Learning credit. However, a single student cannot use both credits; he or she must choose between them.

The Lifetime Learning credit applies to tuition and fees (as with the Hope credit) and the same higher-income phaseout methods apply. To claim the credit, you must use Form 8863, Education Credits (Hope and Lifetime Learning Credits), and attach it to your tax return. Don't forget that if the education was job- or business-related, you might be able to deduct it instead of claiming the credit.