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Why is my lifetime learning credit coming up as 10% instead of 20%?

I filled in the amounts from the form 1098-T that the school sent me, but it did not include the tuition I paid on 12-28-2017 for the quarter beginning in January 2018.  The school said that they could not issue a revised or additional 1098-T.  I inserted the December payment as additional payment not listed on 1098-T.  My total education expenses paid in 2017 was $7089 and Turbo tax is telling me that my credit is $710. At 20% it should be over $1400.  My income for 2017 was less than $20,000.   Please help.

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Accepted Solutions

Why is my lifetime learning credit coming up as 10% instead of 20%?

The Lifetime Learning Credit is also limited to tax liability.  So, the credit can reduce your tax liability to zero, but it can't give you an additional credit beyond your tax liability.  (This is unlike the American Opportunity Credit where you can receive an additional refund from your credit after its applied to your tax liability).

So, its likely that $710 is your tax liability at the point of when your educational credit is applied and that is why your credit is only showing as $710.  A couple other things to note would be (1) to make sure you properly entered the additional payment and (2) your education expenses paid must be reduced by any scholarships or grants received.  These are also reasons it could be less but it is likely you tax liability limitation. 

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Why is my lifetime learning credit coming up as 10% instead of 20%?

The Lifetime Learning Credit is also limited to tax liability.  So, the credit can reduce your tax liability to zero, but it can't give you an additional credit beyond your tax liability.  (This is unlike the American Opportunity Credit where you can receive an additional refund from your credit after its applied to your tax liability).

So, its likely that $710 is your tax liability at the point of when your educational credit is applied and that is why your credit is only showing as $710.  A couple other things to note would be (1) to make sure you properly entered the additional payment and (2) your education expenses paid must be reduced by any scholarships or grants received.  These are also reasons it could be less but it is likely you tax liability limitation. 

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