762 / What is the Lifetime Learning Credit?
The Lifetime Learning Credit is available in an amount equal to 20 percent of “qualified tuition and related expenses” (defined in Q 761) paid by the taxpayer during the taxable year for any course of instruction at an “eligible educational institution” (defined in Q 761) taken to acquire or improve the job skills of the taxpayer, his spouse or dependents. The Lifetime Learning Credit is a per taxpayer credit and the maximum credit available does not vary with the number of students in the family. The maximum amount of the credit is $2,000 (20 percent of up to $10,000 of qualified tuition and related expenses).2
Qualified tuition and related expenses, for the purposes of the Lifetime Learning Credit, include expenses for graduate as well as undergraduate courses. The Lifetime Learning Credit applies regardless of whether the individual is enrolled on a full-time, half-time, or less than half-time basis. Additionally, the Lifetime Learning Credit is available for an unlimited number of taxable years.3
Where taxpayers had pre-paid their child’s tuition in November 2001 for the academic period that began during the first three months of the following taxable year (i.e., the spring semester of 2002), the prepayment amount was properly includable in the calculation of the taxpayers’ Lifetime Learning Credit for the 2001 taxable year, not the 2002 taxable year.4 See Q 761 for a discussion of the Hope Scholarship (American Opportunity) Credit and Q 763 for a discussion of the limitations and phaseouts that apply to both credits.
1. IRC § 25A.