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Lifetime Learning Credit (LLC) | Internal Revenue Service (Tax Year 2025)

Federal education credit for qualified tuition and related expenses for undergraduate, graduate, and job-skill courses.

JJ Ben-Joseph
JJ Ben-Joseph
💰 Funding 20% of up to $10,000 in qualified expenses per return (maximum $2,000 nonrefundable credit)
📅 Deadline Apr 15, 2026
📍 Location United States
🏛️ Source Internal Revenue Service
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Status Update (February 2026)

This page is updated for tax year 2025 returns filed in 2026.

For 2025, IRS Form 8863 instructions continue to show:

  • LLC maximum credit: $2,000 per return
  • credit formula: 20% of up to $10,000 in adjusted qualified expenses
  • nonrefundable treatment
  • MAGI phaseout range: $80,000-$90,000 (single/HOH/QSS) and $160,000-$180,000 (MFJ)

What LLC Is Best For

LLC is often the flexible education credit for:

  • graduate and professional coursework,
  • part-time learners,
  • job-skill and continuing education,
  • households where AOTC is unavailable or less favorable.

Unlike AOTC, LLC is not limited to first four years of postsecondary education and does not require half-time enrollment.

Qualified Expense Rules

Typically included:

  • tuition and required enrollment fees,
  • required course materials only when payment to the institution is required as a condition of enrollment.

Typically excluded:

  • room and board,
  • insurance and medical costs,
  • transportation,
  • optional non-required fees.

1098-T and Documentation

IRS instructions emphasize Form 1098-T requirements for education credits, with limited exceptions. Keep both school-issued statements and your own payment records.

If payment timing and school reporting differ, keep a reconciliation note and supporting receipts.

MAGI and Phaseout Planning

For 2025 returns, LLC phases out between $80,000 and $90,000 MAGI for single/HOH/QSS and between $160,000 and $180,000 for MFJ. If your MAGI is near the edge of those bands, run the calculation before filing instead of assuming you will receive the full $2,000.

Small year-end income changes can reduce or eliminate the credit. Households that expect variable income should model best-case and worst-case MAGI scenarios before finalizing tax strategy.

How to Claim

  1. Collect Form 1098-T and payment records.
  2. Calculate adjusted qualified expenses after tax-free educational assistance.
  3. Complete Form 8863 (Part II/Part III as applicable).
  4. Ensure no same-student overlap with AOTC for the same tax year.
  5. File by April 15, 2026 (or extension).

Common Errors

  • Treating LLC as refundable.
  • Claiming nonqualified costs.
  • Double-counting expenses already used for tax-free aid or other benefits.
  • Ignoring phaseout effects when MAGI is near threshold.
  • Using old-year instructions.

Post-Filing Adjustment Risk

If you receive tuition refunds, scholarships, or other education-benefit adjustments after filing, your originally claimed LLC amount may need correction. Keep post-filing school account statements with your return records so you can evaluate whether an amended return is required.

When tax benefits overlap (for example, tuition used for an employer exclusion or another education benefit), assign each expense line to one benefit only and document that assignment.

Practical Planning Tips

  • Assign each tuition dollar to exactly one tax treatment.
  • Compare AOTC vs LLC across students before filing.
  • If MAGI is near phaseout, model year-end income adjustments.
  • Keep receipts showing when expenses were paid, especially around year-end billing cycles.

Filing Accuracy Check

Before filing, verify that 1098-T amounts, your adjusted qualified expense calculation, and Form 8863 entries reconcile to your return workpapers. Most LLC issues come from calculation mismatches, not eligibility misunderstandings. A simple pre-file reconciliation sheet can prevent avoidable notices and amended returns.

Official Sources