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able to demonstrate that you (or a dependent) were enrol- led at an eligible educational institution, and substantiate the payment of qualified tuition and related expenses. Introduction For 2021, 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 oppor- tunity credit and the lifetime learning credit. This chapter discusses the lifetime learning credit. The American op- portunity credit is discussed in chapter 2. This chapter explains: • Who can claim the lifetime learning credit, • What expenses qualify for the credit, • Who is an eligible student, • Who can claim a dependent's expenses, • How to figure the credit, • How to claim the credit, and • When the credit must be repaid. What is the tax benefit of the lifetime learning credit? For the tax year, you may be able to claim a lifetime learn- ing credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the num- ber 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 nonrefunda- ble credit. This means that it can reduce your tax to zero, but if the credit is more than your tax, the excess won't be refunded to you. Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. Can you claim more than one education credit this year? 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 2021 tax return, you can't, for that same child, also claim the American op- portunity credit for 2021. If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportu- nity credit for the same student in the same year, you can choose to claim either credit, but not both. If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. 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 TIP means that, for example, you can claim the American op- portunity credit for one student and the lifetime learning credit for another student in the same year. Differences between the American opportunity and lifetime learning credits. There are several differences between these two credits. For example, you can claim the American opportunity credit for the same student for no more than 4 tax years. However, there is no limit on the number of years for which you can claim a lifetime learn- ing credit based on the same student's expenses. The dif- ferences between these credits are shown in Appendix B near the end of this publication. Overview of the lifetime learning credit for 2021. See Table 3-1 for the basics of the credit. The details are dis- cussed in this chapter. Can You Claim the Credit? The following rules will help you determine if you are eligi- ble to claim the lifetime learning credit on your tax return. Who Can Claim 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 edu- cation. • You pay the education expenses for an eligible stu- dent. • The eligible student is either yourself, your spouse, or a dependent you claim on your tax return. Chapter 3 Lifetime Learning Credit Page 23