Updated October 28, 2026. Quick answer: Worksheet 3-1 in Publication 970 figures the modified adjusted gross income used to phase out the lifetime learning credit. It is the same seven-line calculation as the American opportunity credit worksheet, but the answer goes on Form 8863 line 14, not line 3.
More on the 2026 tax figures: the education credit phase-out for 2026.
What it is for
The publication states the phaseout: “The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return).” “You can’t claim a lifetime learning credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).” And for the measure: “You can use Worksheet 3-1 to figure your MAGI.” The sister worksheet is Worksheet 2-1.
The seven lines
| Line | What the worksheet says |
|---|---|
| 1 | “Enter your adjusted gross income (Form 1040 or 1040-SR, line 11a)” |
| 2 | “Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45)” |
| 3 | “Enter your foreign housing deduction (Form 2555, line 50)” |
| 4 | “Enter the amount of income from Puerto Rico you’re excluding” |
| 5 | “Enter the amount of income from American Samoa you’re excluding (Form 4563, line 15)” |
| 6 | “Add the amounts on lines 2, 3, 4, and 5” |
| 7 | “Add the amounts on lines 1 and 6. This is your modified adjusted gross income. Enter this amount on Form 8863, line 14” |
Line 11a or line 11b
The publication points to line 11a, and the Form 8863 instructions point to line 11b: “Generally, your MAGI is the amount on your Form 1040 or 1040-SR, line 11b. However, if you’re filing Form 2555, or Form 4563, or are excluding income from Puerto Rico, you must include on line 14 the amount of income you excluded.” They are the same AGI. On the 2025 Form 1040, line 11b reads “Amount from line 11a (adjusted gross income)”, repeating line 11a at the top of page 2.
The publication’s phaseout example
“Phaseout. If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using” lines 10 to 18 of Form 8863. The example is a joint return with a MAGI of $161,000 and $6,600 of qualified education expenses.
| Step | Amount |
|---|---|
| Qualified education expenses paid | $6,600 |
| Tentative credit: 20% of $6,600 (computed) | $1,320 (computed) |
| MAGI (joint return) | $161,000 |
| Numerator: $180,000 upper limit minus MAGI | $19,000 (computed) |
| Denominator: the phaseout range, $160,000 to $180,000 | $20,000 (computed) |
| Reduced credit, computed: $1,320 x $19,000 / $20,000 | $1,254 (computed) |
The reduced credit is $1,254. The publication builds the tentative credit as “You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students).”.
Two credits, two lines
Both worksheets compute the same quantity, MAGI, and both credits have the same $80,000 to $90,000 single and $160,000 to $180,000 joint phaseout. What differs is where the answer goes: line 3 of Form 8863 for the American opportunity credit and line 14 for the lifetime learning credit. You can only claim one of the two credits for the same student in the same year.
Edition
This page reads Publication 970 (2025), the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own copy and use that year’s line numbers and dollar amounts, because a different year’s worksheet can word its lines differently.
Common mistakes
- Entering the result on Form 8863 line 3. For this credit the worksheet sends it to line 14.
- Skipping the add-back of the Form 2555 exclusion and housing deduction for filers who live abroad.
- Using a different year’s phaseout range. Check the range printed in the publication for the year of your return.
- Treating the credit as a deduction. The reduced amount is a credit, claimed on Schedule 3 line 3.
Related: Form 8863, Form 8863 line 31, American opportunity credit MAGI worksheet, and education credits.
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Answer againSources
- Publication 970 (2025), Tax Benefits for Education: https://www.irs.gov/pub/irs-pdf/p970.pdf
- Instructions for Form 8863 (2025), Education Credits: https://www.irs.gov/pub/irs-pdf/i8863.pdf
- Form 1040 (2025), U.S. Individual Income Tax Return: https://www.irs.gov/pub/irs-pdf/f1040.pdf
Read from the IRS documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.