2016 Lifetime Learning Credit
For 2016, the Lifetime Learning Credit is $2,000 (Maximum credit), 20% (Rate on qualified expenses) and $10,000 (Qualified expenses limit).
Effective 2016-01-01Source: Publication 970 (2016), Tax Benefits for Education (IRS)Verified 2026-08-29
Who it applies to
Taxpayers who paid qualified education expenses in 2016 for themselves, a spouse, or a dependent enrolled in eligible postsecondary courses.
What changed this year, and why
The Lifetime Learning Credit for 2016 is 20% of the first $10,000 of qualified education expenses paid for all eligible students, producing a maximum credit of $2,000 per return.
Common questions
- How is the Lifetime Learning Credit calculated?
- The credit equals 20% of the first $10,000 of qualified education expenses paid for all eligible students, for a maximum credit of $2,000 per return.
The cap is per tax return, not per student
The Lifetime Learning Credit caps at $2,000 for the tax return, regardless of how many students you paid expenses for. Even if you have multiple children in college and paid qualified expenses for all of them, your maximum credit on that return remains $2,000. This differs from some other education benefits that are calculated separately for each student. The credit is 20% of qualified expenses, and since the maximum credit is $2,000, the maximum qualified expenses that generate credit is $10,000 per return. Any qualified expenses beyond $10,000 across all students combined do not increase your credit. So no matter how many eligible students you support or how much you spend on their education, the per-return limit of $2,000 is the ceiling for the Lifetime Learning Credit.
Maximum credit Up to $2,000 credit per return
Publication 970 (2016), Tax Benefits for Education (IRS)
It can wipe out your tax but never pays you back
The Lifetime Learning Credit is nonrefundable, which means it can reduce the income tax you owe on your taxable income, but only down to zero. If the credit amount is greater than your total tax liability for the year, the IRS does not refund the difference to you. For example, if you qualify for the full $2,000 credit but you owe less than $2,000 in tax after all other calculations, the credit wipes out the tax you owe entirely, but the remaining portion of the credit is simply lost - it is not paid back to you as a refund. This is why the credit is described as limited to the amount of tax you must pay. You should plan to claim the credit in a year when you have enough tax liability to use the full amount, since any excess above your tax bill cannot be carried forward or refunded to you.
This means that it can reduce your tax to zero, but if the credit is more than your tax the excess won't be refunded to you.
Publication 970 (2016), Tax Benefits for Education (IRS)
There is no cap on how many years you claim it
Unlike the American Opportunity Credit, which is limited to four tax years per student, the Lifetime Learning Credit has no restriction on how many years you can claim it for the same student. You can claim it for one year, for every year of a four-year degree program, for graduate school, for a second bachelor's degree, or for individual courses taken to acquire or improve job skills - even if the student never pursues a degree. There is no lifetime cap on the number of years the credit is available. As long as you meet the other eligibility requirements each year - including paying qualified education expenses for an eligible student at an eligible educational institution and staying within the income limits - you may claim the credit repeatedly, year after year, for the same person.
There is no limit on the num- ber of years the lifetime learning credit can be claimed for each student.
Publication 970 (2016), Tax Benefits for Education (IRS)
A single course to improve job skills qualifies
Courses taken to acquire or improve job skills qualify for the Lifetime Learning Credit even if they are not part of a degree program. This means that sports, games, hobbies, and noncredit courses - which normally do not count as qualified education expenses - can become eligible if the student takes them to gain or enhance skills needed for their job. For example, a working professional who enrolls in a single continuing-education course to stay current in their field can use those expenses toward the credit, even though they are not pursuing a diploma or certificate. The credit is 20% of qualified expenses up to $10,000, producing a maximum credit of $2,000 per return. The key is that the course must be taken for job-skills reasons, not merely for personal interest.
However, if the course of instruction or other education is part of the student's degree program or is taken by the student to acquire or improve job skills, these expenses can qualify.
Publication 970 (2016), Tax Benefits for Education (IRS)
One student, one credit, one year
For any given student in any given tax year, you may elect only one education credit - the American Opportunity Credit or the Lifetime Learning Credit. You cannot claim both credits for the same student in the same year. For example, if you choose to claim the Lifetime Learning Credit for a dependent child on your 2016 return, you forfeit the American Opportunity Credit for that child for that year. The IRS notes that when you have the choice, the American Opportunity Credit will generally be larger than the Lifetime Learning Credit for the same student's expenses, so it is usually more advantageous to claim the American Opportunity Credit if the student qualifies for it. However, the Lifetime Learning Credit may be preferable if the student does not meet the American Opportunity Credit's eligibility requirements or if the American Opportunity Credit has already been claimed for that student in four prior years.
If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportu- nity credit for the same student in the same year, you can choose to claim either credit, but not both.
Publication 970 (2016), Tax Benefits for Education (IRS)
The income at which you lose the credit entirely
The Lifetime Learning Credit phases out as your income rises and disappears entirely once your modified adjusted gross income (MAGI) reaches certain thresholds. For 2016, if your MAGI is $65,000 or more as a single filer, head of household, or qualifying widow(er), you cannot claim the credit at all. For married couples filing jointly, the complete phaseout begins at $131,000 or more. You also cannot claim the credit at all if your filing status is married filing separately, regardless of income. Between the lower and upper bounds of the phaseout range, the credit is gradually reduced. If your income exceeds the upper limit, you are not eligible for any portion of the credit, no matter how much you spent on qualified education expenses. The maximum credit of $2,000 is available only to taxpayers whose MAGI falls below the phaseout range.
Your modified adjusted gross income (MAGI) is $65,000 or more ($131,000 or more if filing married fil- ing jointly).
Publication 970 (2016), Tax Benefits for Education (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 970 (2016), Tax Benefits for Education (IRS)
- Maximum credit
Maximum credit Up to $2,000 credit per return
- Rate on qualified expenses
The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students.
- Qualified expenses limit
The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students.