Northern Arizona University

Beginning July 1, 1998, taxpayers are eligible to claim a nonrefundable Lifetime Learning Credit against their federal income taxes. The Lifetime Learning Tax Credit may be claimed for the qualified tuition and related expenses of the students in the taxpayer's family (i.e., the taxpayer, the taxpayer's spouse, or an eligible dependent) who are enrolled in eligible educational institutions. Courses must either be directed toward a degree program or developing job-related skills. The amount that may be claimed as a credit for 2003 is equal to 20 percent of the taxpayer's first $10,000 of out-of-pocket qualified tuition and related expenses for all eligible students. Thus, the maximum credit a taxpayer may claim for 2003 is $2,000.

If the taxpayer is claiming a Hope Scholarship Tax Credit for a particular student, none of that student's expenses for that year may be applied toward the Lifetime Learning Tax Credit. The amount a taxpayer may claim as a Lifetime Learning Tax Credit is gradually reduced for taxpayers who have modified adjusted gross income between $42,000 ($85,000 for married taxpayers filing jointly) and $52,000 ($105,000 for married taxpayers filing jointly). Taxpayers with modified adjusted gross income of $52,000 or more  ($105,000 for married taxpayers filing jointly) may not claim a Lifetime Learning Tax Credit. The definition of modified adjusted gross income is the same as it is for purposes of the Hope Scholarship Tax Credit.

To claim the Lifetime Learning Tax Credit, complete IRS Form 1040 or 1040A and attach IRS Form 8863 "Education Credits (Hope and Lifetime Credits)" which directs you in the calculation of the credit.