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For students who can't qualify for the American Opportunity credit, the Lifetime Learning credit provides a smaller tax benefit for an unlimited number of years in which one or more post-secondary educational courses are taken. The courses can apply toward an undergraduate, graduate, or professional degree, certificate program, or other academic credential. Moreover, you do not need to be pursuing any particular type of degree. 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 American Opportunity credit, other family members may use the full $2,000 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, fees and course materials (as with the American Opportunity credit), and the same income phaseout methods apply, but at lower income levels. The phaseout of the Lifetime Learning credit occurs in the income range from $50,000 to $60,000 for singles and from $100,000 to $120,000 for married couples filing jointly.
To claim the credit, you must use Form 8863, Education 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 as a business expense instead of claiming the credit.