Lifetime Learning Credit

AAA

DEFINITION of 'Lifetime Learning Credit'

A provision of the U.S. federal income tax code that lets parents and students lower their tax liability by up to $2,000 to help offset higher education expenses. The Lifetime Learning Credit matches dollar for dollar, up to the $2,000 limit, the amount that the parent or student spends on qualified education expenses for a student enrolled at an eligible post-secondary educational institution. This credit may be claimed year after year, but it cannot be combined with the Hope Credit or American Opportunity Credit in the same tax year.

INVESTOPEDIA EXPLAINS 'Lifetime Learning Credit'

The U.S. government subsidizes individuals' higher education expenses through a number of tax credits, tax deductions and tax-advantaged savings plans. Each of these programs lowers income tax liability for students or their parents. The subsidies include the Lifetime Learning, Hope and American Opportunity credits; tuition and fees, work-related education and student loan interest deductions; and Coverdell education savings accounts and 529 savings plans.

RELATED TERMS
  1. Learning Curve

    A concept that describes how new skills or knowledge can be quickly ...
  2. Vocational Degree

    An educational certificate that specifically prepares an individual ...
  3. Student Loan Interest Deduction

    A tax deduction for interest paid on higher education loans during ...
  4. Qualified Higher Education Expense

    Expenses such as tuition and tuition related expenses that an ...
  5. Full-Time Student

    A status that is important for determining dependency exemptions. ...
  6. Qualified Savings Bond

    Refers to a series EE savings bond which has been issued after ...
RELATED FAQS
  1. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  2. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
  3. What are the best MBA programs for corporate finance?

    Opinions vary based on which publications you consult, but the best MBA programs for a career in corporate finance are at ... Read Full Answer >>
  4. What tax breaks are afforded to a qualifying widow?

    The tax breaks accorded to qualifying widows or widowers include being able to use a tax filing status that allows for a ... Read Full Answer >>
  5. How is income taxed on prorated salary?

    Since yearly income is viewed by the Internal Revenue Service (IRS) as the total amount of income a person has made over ... Read Full Answer >>
  6. How can I tell which of my business expenses count as write-offs?

    Any basic, reasonably necessary expenses incurred in running a business can be considered possible write-offs. Such expenses ... Read Full Answer >>
Related Articles
  1. Economics

    Invest In Yourself With A College Education

    Spending a few thousand dollars on school could help you earn millions more.
  2. Taxes

    Clearing Up Tax Confusion For College Savings Accounts

    Put your kids through school without being hounded by the tax man.
  3. Savings

    Retirement Savings Tips For Young People

    Learn how to avoid the bad habits that keep the average young adult from saving.
  4. Taxes

    Student Tax Breaks

    Education bills may not be as stressful as you think - these student tax breaks can help!
  5. Retirement

    Getting A Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
  6. Options & Futures

    Invest In Your Education With An RESP

    All Canadians should know the benefits of these flexible education savings plans.
  7. Budgeting

    Pay For A College Education With Retirement Funds

    These savings vehicles may be better than college saving funds for some families.
  8. Taxes

    What's a Tax Shield?

    A tax shield is a deduction, credit or other means used to reduce the amount of taxes an individual or business owes to the government.
  9. Taxes

    What's an Indirect Tax?

    An indirect tax is levied on goods or services rather than on an individual or a company.
  10. Taxes

    Understanding Excise Taxes

    An excise tax is an indirect levy charged for the sale or use of a particular item.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!