Created by the Taxpayer Relief Act of 1997, the Lifetime Learning Credit reduces the amount of your federal taxes based on qualifying "out-of-pocket" educational expenses paid for yourself, your spouse or your dependent child. Qualifying "out-of-pocket" expenses include tuition and fees less any grants and scholarships received. It does not include room, board, books, and transportation.

Through the Lifetime Learning Credit, you may be able to claim a tax credit of up to $2,000 (20% of the first $10,000). This credit is calculated per family, not per student.

The maximum credit is the same, no matter how many family members are in school. You can claim this credit at any time during a student's education at an eligible school. The student needs only to be enrolled in one course. Most schools are eligible; please check with your school to confirm.

Restrictions

The Lifetime Learning Credit you are allowed may be limited by the amount of your income, the amount of your tax or your filing status. Only one taxpayer (either the student or the parent) may claim this tax credit. In addition, you may claim only one education tax credit — either the Hope Credit or the Lifetime Learning Credit — per student, per tax year. If you pay qualified education expenses for more than one student, you can claim the Hope Credit for one student and the Lifetime Learning Credit for the other, in the same year.

Learn more about the other types of tax benefits available:

• Reduce taxes with the Hope Credit
• Deduct student loan interest
• Receive tax-free treatment of canceled student loans
• Deduct tuition and fees for higher education
• Make early withdrawals from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax
• Cash in savings bonds for education costs without paying tax on the interest
• Receive tax-free educational benefits from your employer

A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself.

The information contained in this section is from IRS Publication 970: Tax Credits for Education. PNC does not provide tax advice and makes no representation or warranty as to the accuracy of the information. Please consult your tax advisor for tax advice matters contained in this section.

For more information, visit www.irs.gov or call 800-829-1040.