Eligible for Lifetime Learning Credit but can't claim it?

[lilew72]

I am a 23 year old graduate student at an eligible institution. TurboTax first tells me I am eligible for the Lifetime Learning Credit. When I click continue it says, 

"You can't claim an education tax break.  Based on what you've entered so far you are not eligible for an education credit.  Here is why you may not qualify: 1. Somebody else can claim you as a dependent on their return  2. There is no taxable income in your return 3. There were no net qualified education expenses."

I know #1 is not the case for multiple years.

#2, I have taxable income in my return from working part-time (~$2,400). Did I make too little? I certainly didn't make the $80-90k range where it phases out or above that.

#3 I assume couldn't be true... over $40k in reported tuition from my 1098 and reported only $5000 in scholarships. So the scholarship doesn't exceed tuition. 

I am hoping someone might have a solid answer as to why I cannot claim this credit as it could be very beneficial for me. I have seen other threads about this but none with the same circumstances as me (typically make too much money/filed joint with a spouse). Thank you in advance!

[xmasbaby0 · Accepted solution]

The Lifetime Learning credit is a non-refundable credit that can reduce your tax liability.   If your income was only the $2400 you mentioned, you have no tax liability so the credit does nothing for you.

LIFETIME LEARNING CREDIT

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/expenses-qualify-...

[Hal_Al]

Yes, it's #2, there is no taxable income in your return.

$2400 of reportable  income is quickly wiped out by your $14,600 standard deduction.  Why are you even filing a tax return, with only $2400 of income?

Full time students, under age 24, usually still qualify to be a dependent of their parent.  The lifetime Learning Credit would be worth $2000 to someone who can claim you as a dependent, but worth $0 to you. 

You say you have not been a dependent for multiple years?  Who claimed the refundable credit during your undergrad years?  

A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit. 

You cannot claim the (up to) $1000 refundable credit if you are, or can be, claimed as a dependent by someone else.

Reference: Line 7 instructions for form 8863.

https://www.irs.gov/instructions/i8863#en_US_2024_publink53002gd0e674