For 2015, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American Opportunity Credit and the Lifetime Learning Credit.
TAX BENEFIT – For the tax year, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years the Lifetime Learning Credit can be claimed for each student. A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The Lifetime Learning Credit is a nonrefundable credit, so if the credit is more than your tax the excess will not be refunded to you. Your allowable Lifetime Learning Credit is limited by the amount of your income and the amount of your tax.
ONLY ONE EDUCATION CREDIT ALLOWED – For each student, you can elect for any year only one of the credits. For example, if you elect to claim the Lifetime Learning Credit for a child on your 2015 tax return, you cannot, for that same child, also claim the American Opportunity Credit for 2015. If you are eligible to claim the Lifetime Learning Credit and you are also eligible to claim the American Opportunity Credit for the same student in the same year, you can choose to claim either credit, but not both. If you pay qualified education expenses for more than one student in the same year, you can choose to claim certain credits on a per-student, per-year basis. This means that, for example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.
CLAIMING THE CREDIT – Generally, you can claim the Lifetime Learning Credit if all three of the following requirements are met.
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student (a student who is enrolled in one or more courses at an eligible educational institution).
- The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
Table 3-1. Overview of the Lifetime Learning Credit for 2015
Up to $2,000 credit per return
Limit on modified adjusted gross income (MAGI)
$128,000 if married filing jointly;
$64,000 if single, head of household, or qualifying widow(er)
Refundable or nonrefundable
Nonrefundable-credit limited to the amount of tax you must pay on your taxable income
Number of years of postsecondary education
Available for all years of postsecondary education and for courses to acquire or improve job skills
Number of tax years credit available
Available for an unlimited number of tax years
Type of program required
Student does not need to be pursuing a program leading to a degree or other recognized education credential
Number of courses
Available for one or more courses
Felony drug conviction
Felony drug convictions do not make the student ineligible
Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment)
Payments for academic periods
Payments made in 2015 for academic periods beginning in 2015 or beginning in the first 3 months of 2015
CANNOT CLAIM THE CREDIT – You cannot claim the Lifetime Learning Credit for 2015 if any of the following apply.
- Your filing status is married filing separately.
- You are listed as a dependent on another person’s tax return.
- Your modified adjusted gross income (MAGI) is $64,000 or more ($128,000 or more in the case of a joint return).
- You (or your spouse) were a nonresident alien for any part of 2015 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519.