Lifelong Learning Credit and MAGI

[jmcgee69]

IRS states LLC is available for taxpayers that have a MAGI of 136,000 or less.  I have education expenses but TurboTax is not using the AGI-MAGI to properly calculate if I am eligible for the LLC.  instead, it is just using the tuition deduction which is an income reduction, not a credit.  My Taxable income / AGI is less than 136000

[JotikaT2]

It depends.

TurboTax typically utilizes the deduction or credit that yields the highest tax benefit for your particular situation.  

You can review the results for your particular case by doing the following:

Go back into your federal interview section.

1. Select Deductions & Credits
2. Select Expenses and Scholarships (Form 1098-T)
3. Select Continue through the pages until you see Next, We'll See Which Deduction or Credit Will Save You the Most
4. Select Maximize Your Tax Break
5. You will see the following screens showing what you qualify for:

On this page, select Show Me Results For What Else I Qualify For.

When you do this, you will see the following screen that will tell you the amount of the other credits/deductions available and the amounts you would get if used those options instead.

Select More Info to get more details on how it applies to you.

[Hal_Al]

How much less than $136,000 is your Modified Adjusted Gross income (MAGI)?  The LLC is phased out between MAGI of $116,000 and  $136,000. So, for example if your MAGI is $135,000. you only get 1/20 of the maximum $2000 credit (1/20 x 2000 = $100).  If your MAGI is $117,000. you get 19/20 x 2000 = $1900.

The Tuition and Fees deduction (TFD) is not phased out.  Under $130,000 MAGI, you get a $4000 deduction. Between $130,000 and $160,000, your get $2000.