I cannot understand why TurboTax is calculating my Lifelong Learning Credit to be only $798. I've read through all the requirements of the credit and I meet everything, with my education expenses (Form 1098-T) being well over $20,000. My income for the year was less than $25,000. Shouldn't my credit be the full $2000?
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The Lifetime Learning Credit (LLC) is a non-refundable credit. If your tax liability (lines 16- 18 of form 1040) is less than $2000, then that's all you will get.
Also note that the LLC cannot be used to reduce self employment tax (line 23 of form 1040).
The Lifetime Learning Credit is not a refundable credit. It can only reduce your tax owed. If you do not owe the full $2000 then you get up to your tax liability to reduce your tax owed to zero.
The Lifetime Learning Credit (LLC) is a non-refundable credit. If your tax liability (lines 16- 18 of form 1040) is less than $2000, then that's all you will get.
Also note that the LLC cannot be used to reduce self employment tax (line 23 of form 1040).
Thank you! My tax liability is more than $2000 but there was no indication anywhere that the credit cannot be used to reduce self employment tax. That must be the issue because the majority of my income is from self employment.
self employment tax (which is really payment of medicare and social security tax) is never reduced by other credits. Only the income tax, which is separate from self-employment tax, can be reduced by tax credits.
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