Lifetime Learning Credit of 1997 Tax Act

Lifetime Learning Credit of 1997 Tax Act

Less financially attractive than Hope credit

Wider applicability than Hope credit

Phase-outs and other details

Less financially attractive than Hope credit

Maximum credit of $1,000 per year

Hope credit offers maximum $1,500 per year

After 2002 maximum lifetime learning credit increases to $2,000 per year

Can only claim credit for 20 percent of qualified tuition and fee expenses

Ex. : Spend $1,000 on tuition, claim $200 credit

Hope credit allows 100 percent on first $1,000 of tuition, 50 percent credit for second $1,000 of tuition

Wider applicability than Hope credit

Unlike Hope credit, no need to be at least a half-time student if classes are used to improve job skills

Unlike Hope credit, lifetime learning credit can be claimed any number of times

Hope credit limited to first two years of college

But, you can not use lifetime learning credit if you qualify for Hope credit

Phase-outs and other details

Phase-outs the same as for Hope credit

Single filers : modified AGI between $40,000 - 50,000

Married, joint filers : modified AGI between $80,000 - 100,000

Married, separate filers : NO CREDIT

Can claim lifetime learning credit after June 30, 1998

Can apply credit for expenses incurred by yourself, spouse or a dependent

Mutually exclusive with Hope credit or tax-free education IRA distributions

Can use one and only one of these three in a year

Nonrefundable credit - no credit if insufficient tax liability