A 1098-T is a tax form that colleges and universities send to students each year, reporting how much was paid toward tuition and how much the student received in scholarships or grants. You need this form to claim education tax credits on your federal return, specifically the American Opportunity Tax Credit (worth up to $2,500) and the Lifetime Learning Credit (worth up to $2,000). Schools are required to send the form by January 31 for the previous tax year.
What the Form Reports
The 1098-T is a simple one-page form, but two boxes matter most. Box 1 shows the total payments received for qualified tuition and related expenses during the calendar year. This includes tuition, required fees, and course materials you had to buy as a condition of enrollment. It does not include room and board, insurance, transportation, or optional fees.
Box 5 shows the total scholarships and grants disbursed to your account during the same period. This covers federal aid like Pell Grants, state grants, institutional scholarships, and funding from outside organizations. If the amount in Box 5 is larger than Box 1, it means your scholarships exceeded your qualified expenses, and the difference may count as taxable income.
Other boxes on the form note whether you were at least a half-time student (Box 8), whether you were a graduate student (Box 9), and any adjustments to prior-year amounts. For most students, Boxes 1 and 5 are the only numbers that affect their tax return.
Why It Matters for Tax Credits
Federal law requires most students to have received a 1098-T before they can claim either of the two main education tax credits. The American Opportunity Tax Credit covers up to $2,500 per eligible student per year and applies to the first four years of undergraduate education. Forty percent of it (up to $1,000) is refundable, meaning you can get that money back even if you owe no tax.
The Lifetime Learning Credit covers up to $2,000 per tax return and has no limit on how many years you can claim it. It applies to undergraduate, graduate, and professional degree courses, as well as classes taken to improve job skills. Unlike the AOTC, the Lifetime Learning Credit is not refundable.
Both credits phase out at higher incomes. Your modified adjusted gross income generally needs to be below $90,000 (or $180,000 if married filing jointly) to qualify. You cannot claim both credits for the same student in the same year, so pick the one that gives you a larger benefit.
How to Use It When Filing Taxes
When you sit down to do your taxes, pull the numbers from your 1098-T to fill out IRS Form 8863, which is the form for claiming education credits. Subtract your scholarships (Box 5) from your qualified expenses (Box 1) to find your out-of-pocket qualified costs. That net figure is what you use to calculate your credit.
If you paid expenses in late December that applied to a spring semester starting in January, those payments still count for the year you paid them. Similarly, if your school posted a scholarship in December for the following semester, it shows up on that year’s 1098-T. Timing differences between when you paid and when the semester starts can create confusion, so compare the form against your own payment records.
Parents and students should also clarify who is claiming the credit. If a student is listed as a dependent on a parent’s return, only the parent can claim the credit. The 1098-T will arrive in the student’s name regardless, so share it with whoever is filing.
Who Gets a 1098-T and Who Doesn’t
Most students enrolled at an eligible college or university will receive one. But schools are not required to send the form in several situations: if you’re a nonresident alien (unless you specifically request it), if your tuition was entirely covered by scholarships or grants, if you took courses that don’t carry academic credit, or if your employer or a government agency like the Department of Veterans Affairs paid your tuition directly through a formal billing arrangement with the school.
Not receiving a 1098-T doesn’t automatically disqualify you from claiming a credit. If the school wasn’t required to issue the form, or if it closed before sending one, you can still claim the AOTC as long as you can prove you were enrolled at an eligible institution and you can document what you paid in qualified expenses. Keep your tuition receipts and enrollment records in case the IRS asks for them.
What to Do If the Numbers Look Wrong
Schools report based on their accounting records, which don’t always match what you remember paying. The most common issue is a timing mismatch: a payment you made in one calendar year getting applied to a different year on the school’s books. Employer tuition reimbursements, late-posting scholarships, and mid-year enrollment changes can also create discrepancies.
If you believe your 1098-T is inaccurate, contact your school’s bursar or student accounts office. They can provide an itemized statement showing exactly which transactions were included. You’re allowed to use your own records when filing your taxes if they’re more accurate than the form, but having documentation to back up any differences protects you if the IRS follows up.