Form 1098-T, Tuition Statement, helps students and parents review education expenses that may support a tax credit claim. It is furnished by an eligible educational institution and may also be issued by certain insurers that make refunds or reimbursements of qualified tuition and related expenses.
A taxpayer does not file Form 1098-T by itself. Instead, the details on the form are used with school records, payment proof, scholarship details, and Form 8863, Education Credits. Form 8863 is then attached to Form 1040 or 1040-SR to claim the American Opportunity Tax Credit or the Lifetime Learning Credit.
So, if you are a student or parent, you do not file Form 1098-T with your tax return. You use it to review education expenses and claim a credit. If you are a school, institution, or certain insurer, you may need to file Form 1098-T with the IRS and furnish a copy to the student.
Understanding Your Form 1098-T Tuition Statement
A completed out Form 1098-T has the details of payments that have been received for qualified tuition and related expenses, scholarships or grants, certain prior-year adjustments, and student status checkboxes for the calendar year.
In most cases, the taxpayer needs Form 1098-T to claim an education credit. If the form is missing or seems wrong, the student should contact the school and keep proof of qualified expenses.
Here are the key boxes to review before using Form 1098-T on a tax return:
| Box | What it shows | Why it matters |
|---|---|---|
| Box 1 | Payments received for qualified tuition and related expenses | Starting point for expense review |
| Box 4 | Prior-year adjustments to payments | May affect a credit claimed earlier |
| Box 5 | Scholarships or grants | May reduce expenses eligible for a credit |
| Box 6 | Prior-year scholarship or grant adjustments | May require a closer review |
| Box 7 | Payment relates to a term starting in January through March of the next year | Helps with timing rules |
| Box 8 | Student was at least half-time | Important for AOTC eligibility |
| Box 9 | Student was a graduate student | Graduate students generally do not qualify for AOTC, so review LLC eligibility |
The most common confusion comes from 1098-T Box 1 and Box 5. Box 1 shows qualified tuition payments received by the school, while Box 5 shows scholarships or grants administered and processed during the year. A taxpayer should not simply subtract Box 5 from Box 1 and treat that as the final credit amount.
For example, a refund may reduce the expenses that can be used, a December payment may relate to a term starting early next year, and a scholarship restricted only to tuition may reduce creditable tuition expenses differently than a scholarship that can be used for other costs. Required course materials may also count for the American Opportunity Tax Credit in some cases, even if they are not clearly reflected in Box 1.
Keep these documents and/or records with your 1098-T form:
- Student account statements
- Tuition payment receipts
- Notices of scholarships and grants
- Refund records
- Receipts for required course materials
- Any school correspondence about corrected forms
How to Use Form 1098-T on Your Tax Return
Using Form 1098-T is easier when the taxpayer follows a clean process.
Step 1: Gather the form and records
Start with Form 1098-T, then compare it with actual school billing records. The IRS itself warns that the amount shown on the form may not reflect the exact qualified education expenses that can be claimed.
Step 2: Confirm who claims the student
If the student is claimed as a dependent, the taxpayer claiming that dependent generally claims the education credit. The same student’s education costs may not be claimed by both the student and parent for the same credit.
Step 3: Review the important boxes
Check the main boxes before calculating the credit.
- The qualified tuition payments received by the school are shown in Box 1.
- Scholarships or grants are shown in Box 5.
- Prior-year adjustments are shown in Box 4 and Box 6.
- Box 7 indicates that certain payments may apply to an academic period starting in the first three months of the next year.
- If Box 8 is checked, it means the student was enrolled at least half-time during the year.
Step 4: Choose the right credit
The American Opportunity Tax Credit is usually for students in their first four years of college. The student must be working toward a degree or another recognized credential and must be enrolled at least half-time. The Lifetime Learning Credit can apply to graduate, part-time, and job-skill courses.
Step 5: Calculate qualified expenses
Begin with qualified tuition and related expenses and then subtract any tax-free scholarships, grants or other tax-free educational assistance paid for the same expenses.
The AOTC covers the cost of books, supplies, and equipment, even if you buy them outside your college. You can also include the cost of a computer if it’s required for attending your course. Activity fees qualify only if they’re mandatory. You can claim up to $4,000 in eligible expenses, with a maximum credit of $2,500.
The LLC covers tuition and required fees. It may also cover course-related books, supplies, and equipment if they must be paid directly to the school as a condition of enrollment or attendance.
Neither covers room and board, transportation, insurance, medical costs, or expenses already paid with tax-free funds.
Step 6: Complete Form 8863 and the return
Use Form 8863 to calculate and claim the American Opportunity Tax Credit or Lifetime Learning Credit. The credit amount is then carried to Form 1040 or Form 1040-SR.
Step 7: Keep proof
Keep Form 1098-T and related records with the tax file. If the IRS asks, the taxpayer should be able to show proof of enrollment, payments, scholarships, and qualified expenses.
Maximizing Tax Benefits with Your 1098-T
A good 1098-T review should focus on accuracy first. Taxpayers should check which education credit fits their situation and confirm the expenses they can use to make sure scholarships or grants are applied correctly before claiming the credit.
When taxpayers file their 2025 returns in 2026, the American Opportunity Tax Credit can be worth up to $2,500 for each eligible student, depending on income and whether the other requirements are met. The Lifetime Learning Credit offers up to $2,000 per return, but it is nonrefundable.
These credits work differently. The American Opportunity Tax Credit generally applies only to the first four years of postsecondary education. The student must be pursuing a degree or another recognized education credential and must be enrolled at least half-time for at least one academic period during the year.
American Opportunity Tax Credit (AOTC) expenses may also include required books, supplies, and equipment needed for a course of study. A portion of the AOTC is refundable, up to 40%, but for a maximum of $1,000. The Lifetime Learning Credit is broader because it can apply to undergraduate, graduate, and job-skill courses, and there is no four-year limit. However, it is fully nonrefundable.
Keep these points in mind to improve accuracy:
- Match each payment to the correct tax year.
- Box 7 may include payments for a term beginning in the first three months of the following year.
- Separate tax-free scholarships and grants from costs paid out of pocket.
- The same expense cannot be used for two tax benefits.
- Comparing the AOTC and LLC can help identify the better option.
- Income limits should also be checked before claiming the credit.
A higher Box 1 amount does not automatically mean a higher education credit. Some costs, such as room and board, insurance, transportation, and medical expenses, are generally not qualified education expenses for these credits. A high amount in Box 5 can also reduce the qualified expenses available for the credit because scholarships and grants may offset tuition or other eligible costs.
Real-Time Scenarios
| Scenario | Situation | Reporting result | Key tax filing point |
|---|---|---|---|
| Spring tuition paid in December | January semester tuition is paid before year-end | Box 1 may include the payment and Box 7 may be checked | The payment may count if IRS timing rules are met |
| Full scholarship student | Scholarship covers qualified tuition | Box 5 may offset most or all expenses | A 1098-T does not automatically create a credit |
| Student is a dependent | Student receives the form, parent claims the student | Parent generally claims the credit if the parent claims the student as a dependent | The student and parent cannot both claim the same education credit for the same student |
| Prior-year refund | School issues a refund tied to an earlier year | Box 4 may show an adjustment | Earlier credit may need review |
| Graduate student | Student assumes AOTC applies | Box 9 may be checked | LLC may fit better because graduate students generally do not qualify for AOTC |
| Corrected school record | 1098-T does not match the account statement | Taxpayer should use supportable records | Contact the school if the form appears wrong |
How 1099Online Helps Institutions File Form 1098-T
So far, we have mostly focused on how students and parents use Form 1098-T to review education expenses and claim a credit. But Form 1098-T starts with the school or institution that prepares it.
Eligible schools, colleges, universities, and certain insurers may need to prepare Form 1098-T, furnish a copy to the student, and e-file the form with the IRS.
1099Online helps eligible educational institutions and authorized filing teams prepare and e-file Form 1098-T. Filing teams can add student details online or upload them in bulk, check each form, and send copies to students through the platform.
Conclusion
Form 1098-T helps students and parents review education expenses, but it does not confirm the final credit by itself. Before claiming the AOTC or LLC, taxpayers should compare Form 1098-T with school records, scholarship details, refunds, and other payment proof.
The institution has a different responsibility. Schools and other eligible filers must prepare and furnish accurate Forms 1098-T so students and parents have reliable information when reviewing their education credits.
FAQs
1. Do taxpayers file Form 1098-T with their tax return?
No. Form 1098-T supports the education credit claim, but taxpayers use Form 8863 to calculate and claim the credit on the tax return.
2. What is the difference between Box 1 and Box 5 on Form 1098-T?
Box 1 shows qualified tuition payments received by the school. Box 5 shows scholarships or grants that may reduce the expenses available for an education credit.
3. Can a taxpayer claim an education credit without a 1098-T?
Usually no. If Form 1098-T is missing, the student should contact the school and keep records showing enrollment and qualified expenses.
4. Who claims the education credit if the student is a dependent?
The taxpayer who claims the student as a dependent generally claims the education credit.
5. Does receiving Form 1098-T automatically mean the taxpayer qualifies for a credit?
Not always. Eligibility depends on many different factors, like income, dependency rules, qualified expenses, enrollment status, and the specific credit rules.
6. What if Form 1098-T does not match school records?
Check school statements, receipts, scholarship information, and refunds. If the form does not seem correct, contact the school before filing.
Help students receive accurate tuition statements by preparing and e-filing Form 1098-T with 1099Online.