Lifetime Learning Credit question

[elatkr36]

Hello,

I was reading the description of the Lifetime Learning Credit in Turbo Tax and I just want to make sure I understand. It says "You can pay expenses with a loan, including low-interest student and government subsidized loans, but be sure to deduct the expenses rather than the loan payments." What does this mean when it says "be sure to deduct the expenses rather than the loan payments"?

[MinhT1]

This means that education expenses paid with loan proceeds can be used to claim the Lifetime Learning credit if all other conditions are satisfied. Paying education expenses with loans is considered like paying with cash.

Let's take an example: You take out a loan of $10,000. With that loan, you pay tuition for $10,000. You repay the loan $200 a month ($2.400 a year). You should use $10,000 as Education expenses to claim the Lifetime Learning credit, and not $2,400). 

[elatkr36]

Thanks for explaining. I haven't made any loan payments yet for this academic degree that I am pursuing. Is the amount that is in Box 1 of my 1098-T my amount of education expenses?

[TeresaM]

Box 1 on Form 1098-T is the amount that the school shows it was paid for tuition and related expenses during the year for this form.  

[Carl]

Basically, your loan payments to the lender are not deductible and don't get reported anywhere on the tax return. However, any portion of the loan used to pay for qualified education expenses are claimed/reported as such, and can help qualify you for the LLC.