This program is a special form of government student financial aid via a federal tax credit and is available to taxpayers who are enrolled in eligible educational institutions, pursuing eligible post-secondary classes, courses and programs. It was created by the federal government to encourage individuals to continue their education to increase their employability, by reducing the financial burden associated with tuition and other expenses. The credit can be used to offset the cost of tuition, fees, and other qualified educational expenses, and is worth up to 20% of the first $10,000 of qualified expenses per year, for a maximum credit of $2,000 per year.
To be eligible for this tax credit, a taxpayer must meet certain requirements. First, the taxpayer must be enrolled or taking classes at an eligible educational institution. Second, the taxpayer must be paying qualified educational expenses for themselves, their spouse, or their dependent. Third, the taxpayer must have a modified adjusted gross income (MAGI) below a certain threshold. For the tax year 2022, the MAGI phase-out range is $59,000-$69,000 for single filers and $119,000-$139,000 for joint filers.
An eligible educational institution is a post-secondary school that is accredited and participates in federal student financial aid programs. Examples of eligible educational institutions include colleges, universities, vocational schools, and other post-secondary educational institutions that are accredited to participate in federal student financial aid programs. To qualify for the Lifetime Learning Tax Credit, the taxpayer or their dependent must be enrolled or taking classes at such an eligible educational institution.
The educational programs that are eligible include undergraduate, graduate, and professional degree programs, as well as courses to acquire or improve job skills. The educational program must be offered by an eligible educational institution and must be designed to help the student acquire or improve job skills. The program does not have to lead to a degree or certificate, but it must be taken by the student to actually acquire or improve job skills and not just for enrichment or social purposes.
Examples of eligible programs include courses in computer technology, foreign languages, accounting, business management, and other subjects that can help the student increase their employability.
The 20% tax credit is only allowed for qualified educational expenses. These include tuition and fees required for enrollment, as well as books, supplies, and equipment required for courses. Room and board, transportation, and personal expenses are not eligible expenses.
Senior citizens can use the Lifetime Learning Tax Credit to offset the costs of tuition and other qualified educational expenses. Many senior citizens may choose to go back to school to learn new skills or pursue a new career, and this tax credit can help make this more affordable. To qualify for the credit, senior citizens must meet the eligibility requirements as outlined above.
To claim the Lifetime Learning Credit Tax Benefit, a taxpayer must file Form 8863 with their tax return. The form requires the taxpayer to provide information about their enrollment in eligible educational programs at eligible educational institutions and their qualified educational expenses. The taxpayer must also provide information about their MAGI, as the credit is subject to income limits, as discussed above.
In addition to the Lifetime Learning Tax Credit, there are other tax credit benefits available to senior citizens. These include the Elderly and Disabled Tax Credit, which is available to taxpayers who are over the age of 65 or who are permanently and totally disabled. The credit is worth up to $7,500 and is based on the taxpayer’s income and filing status.
Seniors who want to take advantage of this tax credit benefit should make sure that the educational program they enroll in is clearly a way for them to obtain new or improved job skills and not just for personal enrichment or socialization purposes.
Also, they must confirm that the school offering the classes or program is fully eligible to participate in Federal Student Financial Aid.