Assuming the credit isn't greater than my federal tax due, shouldn't the calculation of my lifetime learning credit be 20% of the first $10,000 of qualified expenses?

[GiseleD · Accepted solution]

You are correct. The Lifetime Learning Credit is 20% of the first $10,000 of qualified education expenses paid for all eligible students. The maximum credit is $2,000 per return regardless of the number of eligible students. There is no limit on the number of years the credit can be claimed for each student.

Restrictions

Income limit: Credit is phased out at modified AGI between $58,000 and $68,000 ($116,000 and $136,000 MFJ).

Who cannot claim the credit 

No credit is allowed if:

• Filing status is MFS.

• The taxpayer is claimed as a dependent on another person’s tax return.

• The taxpayer or spouse was a nonresident alien for any part of the year who did not elect to be treated as a resident alien for tax purposes.

See here for further information.