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Overview of the Lifetime Learning Credit for 2021 Maximum credit Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filling jointly; $90,000 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 doesn't 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 don't make the student ineligible Qualified expenses 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 2021 for academic periods beginning in 2021 or beginning in the first 3 months of 2022 Note. Qualified education expenses paid by a depend- ent you claim on your tax return, or by a third party for that dependent, are considered paid by you. “Qualified education expenses” are defined later under Qualified Education Expenses. “Eligible students” are de- fined later under Who Is an Eligible Student. A dependent you claim on your tax return is defined later under Who Can Claim a Dependent's Expenses. You may find Figure 3-1 helpful in determining if you can claim a lifetime learning credit on your tax return. Who Can't Claim the Credit? You can't claim the lifetime learning credit for 2021 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 (such as your parents'). See Who Can Claim a Dependent's Expenses, later. • Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if filing married fil- ing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit. • You (or your spouse) were a nonresident alien for any part of 2021 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes. More Table 3-1. information on nonresident aliens can be found in Pub. 519. • You claim the American opportunity credit (see chap- ter 2) for the same student in 2021. What Expenses Qualify? The lifetime learning credit is based on qualified education expenses you pay for yourself, your spouse, or a depend- ent you claim on your tax return. Generally, the credit is al- lowed for qualified education expenses paid in 2021 for an academic period beginning in 2021 or in the first 3 months of 2022. For example, if you paid $1,500 in December 2021 for qualified tuition for the spring 2022 semester beginning in January 2022, you may be able to use that $1,500 in figur- ing your 2021 credit. Academic period. An academic period includes a se- mester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. If an educational institution uses credit hours or clock hours and doesn't have aca- demic terms, each payment period can be treated as an academic period. Paid with borrowed funds. You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. You use the expenses to figure the lifetime learning credit for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan disbursements sent directly to the educational institu- tion as paid on the date the institution credits the student's account. Student withdraws from class(es). You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws. Qualified Education Expenses For purposes of the lifetime learning credit, qualified edu- cation expenses are tuition and certain related expenses required for enrollment in a course at an eligible educa- tional institution. The course must be either part of a post- secondary degree program or taken by the student to ac- quire or improve job skills. Eligible educational institution. An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to par- ticipate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredi- ted public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution. TIP Page 24 Chapter 3 Lifetime Learning Credit