What this line means
The qualified expenses used to calculate the Lifetime Learning Credit for each student. Unlike the AOTC, the LLC has no limit on the number of years you can claim it. 1 It covers undergraduate, graduate, and professional degree courses, as well as courses taken to acquire or improve job skills — even if they do not lead to a degree. The LLC is 20% of up to $10,000 in combined qualified expenses for all students, for a maximum credit of $2,000 per return (not per student). The MAGI phase-out is $80,000—$90,000 for single filers and $160,000—$180,000 for married filing jointly. 2
Does this apply to you?
- You paid tuition or required enrollment fees for a student at an eligible educational institution
- The student is not eligible for the AOTC (or you choose the LLC instead for that student)
- The student is taking courses for undergraduate, graduate, professional, or job-skill improvement purposes
- There is no requirement for half-time enrollment — even a single course qualifies
- Your modified AGI is below $90,000 (single) or $180,000 (married filing jointly)
Easy to overlook
The LLC works for graduate school and professional courses — the AOTC does not Graduate students, law students, medical students, and anyone beyond their fourth year of postsecondary education cannot use the AOTC. The LLC is their only education credit option. A filer pursuing an MBA or a professional certification reports those expenses here. 3 IRS Publication 970 — Lifetime Learning Credit
The $10,000 expense cap and $2,000 credit limit apply per return, not per student Two graduate students on the same return share a single $10,000 expense limit. If one has $7,000 in expenses and the other has $5,000, the combined qualified expenses are capped at $10,000 for LLC purposes, producing a maximum $2,000 credit. This is the opposite of the AOTC, which gives each student a separate $2,500 cap. 4 IRS Form 8863 instructions — Line 31
Watch out for this
You cannot claim both the AOTC and the LLC for the same student in the same year. If a student qualifies for the AOTC, it almost always produces a larger benefit because of the higher per-student maximum ($2,500 vs. $2,000 per return) and the 40% refundable portion. Choose the LLC for a student only when the AOTC is unavailable — for example, a fifth-year undergraduate, a graduate student, or someone taking a single course to improve job skills. Also, course materials (books and supplies) count for the AOTC but do not count for the LLC unless the institution requires them as a condition of enrollment.
Footnotes
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IRS Publication 970, Tax Benefits for Education, Chapter 3 — Lifetime Learning Credit. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Form 8863 Instructions, Part III, Line 31. https://www.irs.gov/instructions/i8863 ↩
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IRS Publication 970, Tax Benefits for Education, Who Can Claim the LLC. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Form 8863 Instructions, Lifetime Learning Credit Limit. https://www.irs.gov/instructions/i8863 ↩