Why is the limit for lifetime learning credit the same for individuals and married couples? Or is it not?

[oeldad]

My wife and I are both graduate students who could claim up to a $2000 credit when filing individually before getting married. It seems that now we must file a joint return in order to qualify for the credit and still the limit is $2000 for us both, whereas before it was $4000 ($2000 each). 

Am I reading the limit wrong or does the IRS significantly penalize married students? 

[Hal_Al · Accepted solution]

The other spouse can claim the Tuition and Fees deduction on line 34 of form 1040 (line 19 of 1040A).

[oeldad]

That's a good point, thanks!
Although, that deduction is capped at $4000 which is quite smaller than a $2000 credit.

[Hal_Al]

Depending on the course of study, the cost may also qualify as a job expense. The general rule is: Educational expenses to improve your current job skills are deductible. But learning a new job is not. From JK Lasser’s Your Income Tax 2013, pg 580: "For a deduction, the courses must be related to your existing job responsibilities and not lead to qualification for a new business. The tax court has allowed deductions for MBA expenses where individuals with some managerial or administrative experience took the courses to improve skills needed for their existing jobs."

[SweetieJean]

Up to $2,000 credit per return

https://www.irs.gov/publications/p970/ch03.html

does the IRS significantly penalize married students

Alas, that's the way Congress wrote the tax law,

[SweetieJean]

Also, you can't claim the lifetime learning credit if your filing status is married filing separately.

[oeldad]

Thanks for your response. That's how I read it too, but was hoping I was wrong. Just doesn't make sense to me to have such a high penalty for getting married without a way to get around it (such as filing separately)

[SweetieJean]

Unfortunately, there are lot of tax "marriage penalties."
<a rel="nofollow" target="_blank" href="http://taxfoundation.org/article/understanding-marriage-penalty-and-marriage-bonus">http://taxfounda...>
(It harkens back to the day when unmarried couples did not live together, so a married couple had fewer living expenses than two single folks...)