Question

Jasper is single and a computer software consultant with a college degree. He feels that one of the reasons for his success is that he continually updates his knowledge by taking classes at the local college in various areas related to software design and information technology. This year he spent $2,000 on course tuition and fees.

a. Assuming Jasper has AGI of $92,000, how much lifetime learning credit can Jasper claim on his tax return?
$0

If Jasper were married and supporting a wife who was not working, how much lifetime learning credit can Jasper claim?
$400

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b. Assuming Jasper is single and has AGI of $45,000, how much lifetime learning credit can Jasper claim on his tax return?
$

Answer 1

a

Life time learning credit phases out when AGI is over $65,000. Thus, no credit available when AGI is more than $90,000 for single individual.

b

Life time learning credit = $2,000 * 20% = $400

c

Amount of credit is = $2,000 * 20% = $400

Notes:

Lifetime learning credit:

Qualified educational expenses paid for an eligible student qualifies for non-refundable lifetime learning credit. They are qualified tuition expenses paid to an eligible educational institution. Student should have enrolled for a minimum of one academic period that starts in tax year. This credit reduces effective cost of educational expenses incurred by taxpayer and encourages take courses and acquire or improve job skills.

Eligible expenses: Qualified tuition and related expenses paid to an eligible institution are qualified educational expenses. Maximum amount of qualified educational expenses are capped at $10,000. Tax-free amounts received such as employer provided educational assistance reduce eligible expenses.

Amount of credit: Amount of credit is 20% of qualified educational expenses. Credit available is subject to phase out based on the AGI of the taxpayers. Credit phases out ratably for AGI between $55000 and $65000 ($110,000 and $130,000 for married filing joint taxpayers).