How to apply for lifetime learning credit
Lifetime Learning Tax Credit Provisions
- The full tax credit is allowed for taxpayers' with adjusted gross income up to $40,000 ($80,000 for married taxpayers filing jointly).
- The amount a taxpayer may claim is gradually reduced for taxpayers who have adjusted gross income between $40,000 ($80,000 for married taxpayers filing jointly) and $50,000 ($100,000 for married taxpayers filing jointly).
- A family must have a tax liability of at least the amount of the credit they take.
- Unlike Hope Scholarship, the Lifetime Learning tax is limited to $1,000 per family per year.
- A student enrolled in one course is eligible for the tax credit.
Education IRA Accounts
- Saving account available in or January 1, 1998.
- Annual, nondeductible contributions of up to $500 per beneficiary per year before the beneficiary reaches age 18.
- All college expenses including tuition, fees, equipment, room and board can be paid from this account for either full-time or part-time students.
- Earnings accumulate tax-free as long as
funds are used to pay for college expenses and are used before the student reaches age 30.
- Parents, grandparents, family members, friends, and the child may contribute provided the total contributions for any one beneficiary do not exceed $500 in any one calendar year.
- Taxpayers can contribute up to $500 to a beneficiary's accounts if the taxpayers' adjusted gross income is not more than $95,000 ($105,000 for married taxpayers filing jointly). The $500 maximum is gradually reduced for taxpayers' with an adjusted gross income between $95,000 and $110,000 (between $150,000 and $160,000 for married taxpayers).
- A student cannot claim the Hope Scholarship Credit or Lifetime Learning Credit in any year the student is receiving a tax-free distribution from an Education IRA.
IRA Withdrawals for Educational Expenses
Understanding how these tax credits will benefit you requires specific knowledge about your individual tax circumstance. Anyone seeking to take advantage of these tax credits should seek qualified counsel in order to determine how they might benefit from these tax credits.Source: prattcc.edu