Why did I not receive the full $2000 from the Lifetime Learning Credit? 20% of expenses would be $2K and income should not have been phased out.

[pkd5p]

My education expenses were about $58K with $16K scholarship, so $42K. My income for the year (from summer internship) was about $21K. So my MAGI should not be high enough to include any phase-outs, and 20% of the $42K should result in the full $2K for the LLC, yet I only received about $1.2K. Why am I not getting the full $2K?

[MinhT · Accepted solution]

The Lifetime Learning Credit is a non-refundable credit. It can only reduce your tax liability to 0, but any excess is not refundable. If your tax liability before the credit is only $1,200, you will only receive $1,200 of credit.

Please see this IRS document:

https://www.irs.gov/credits-deductions/individuals/llc

[pkd5p]

Thanks! That was exactly it. The amount I got for the LLC exactly equaled my tax liability.