Page 30

In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimburse- ments or refunds, and whether the student was enrolled at least half-time or was a graduate student. The eligible educational institution may ask for a com- pleted Form W-9S or similar statement to obtain the stu- dent's name, address, and taxpayer identification number. Effect of the Amount of Your Income on the Amount of Your Credit The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You can't claim a lifetime learning credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint re- turn). Modified adjusted gross income (MAGI). For most taxpayers, MAGI is adjusted gross income (AGI) as fig- ured on their federal income tax return. MAGI when using Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11 of that form, modified by adding back any: 1. Foreign earned income exclusion, 2. Foreign housing exclusion, 3. Foreign housing deduction, 4. Exclusion of income by bona fide residents of Ameri- can Samoa, and 5. Exclusion of income by bona fide residents of Puerto Rico. You can use Worksheet 3-1 to figure your MAGI. MAGI for the Lifetime Learning Credit 1. Enter your adjusted gross income (Form 1040 or 1040-SR, line 11) . . . . . . 1. 2. Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45) . . . . . . . . . . 2. 3. Enter your foreign housing deduction (Form 2555, line 50) . . . . . . . . . . . . . . . 3. 4. Enter the amount of income from Puerto Rico you’re excluding . . . . . . . . 4. 5. Enter the amount of income from American Samoa you’re excluding (Form 4563, line 15) . . . . . . . . . . . . . . . 5. 6. Add the amounts on lines 2, 3, 4, and 5 . . . . . . . . . . . . . . . . . . 6. 7. Add the amounts on lines 1 and 6. This is your modified adjusted gross income. Enter this amount on Form 8863, line 14 . . . . . . . . . . . . . . . 7. Phaseout. If your MAGI is within the range of incomes where the credit must be reduced, you will figure your re- duced credit using lines 10–18 of Form 8863. The same method is shown in the following example. Example. You are filing a joint return with a MAGI of $161,000. In 2022, you paid $6,600 of qualified education expenses. You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). The result is a $1,320 (20% x $6,600) tentative credit. Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. The numerator (top part) of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator (bottom part) is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). The result is the amount of your phased-out (reduced) lifetime learning credit ($1,254). $1,320 × $180,000 - $161,000 = $1,254 $20,000 Worksheet 3-1. Page 30 Chapter 3 Lifetime Learning Credit