A 1098-T for international students works one of two ways, and which way depends entirely on your tax residency status. If the IRS treats you as a resident alien, the form lets you claim education tax credits worth up to $2,500, the same as any U.S. citizen. If you’re a non-resident alien, you can’t claim those credits, but the form still matters: it tells you how much of your scholarship or fellowship counts as taxable income. Getting this distinction wrong is the single most common tax mistake international students make.
Why You May Not Have Received a 1098-T
Schools are not required to issue Form 1098-T to a student who is a non-resident alien for the calendar year. Federal regulations specifically exempt institutions from filing the form for non-resident alien students unless the student requests it. Schools are also exempt from issuing the form when scholarships or grants fully cover a student’s tuition.1eCFR. 26 CFR 1.6050S-1 – Information Reporting for Qualified Tuition and Related Expenses
If you need the form, ask your registrar or student accounts office in writing. Once you request it, the school is required to produce it for that calendar year. You’ll need a Social Security Number or Individual Taxpayer Identification Number on file first, because the school has to report that number to the IRS.
What the form reports: Box 1 shows total payments the school received for qualified tuition and required enrollment fees during the calendar year. Room and board, health insurance, and transportation don’t count as qualified expenses, even when they appear on the same bill.
Resident Alien or Non-Resident Alien? That’s the Question
Your visa type doesn’t settle this directly. An F-1 student in year seven may be a resident alien; an F-1 student in year three almost certainly isn’t. Tax residency is a separate IRS classification from immigration status, and it controls everything about how you use the 1098-T.
Resident aliens are taxed like U.S. citizens: on worldwide income, with full access to credits and deductions. Non-resident aliens are taxed only on U.S.-sourced income and are locked out of most credits, education credits included.2Internal Revenue Service. Education Credits
The Substantial Presence Test
The IRS uses the Substantial Presence Test to classify non-citizens. You meet it if you were physically present in the U.S. for at least 31 days during the current year and at least 183 days across a three-year lookback: all days this year, one-third of last year’s days, and one-sixth of the days two years back.3Internal Revenue Service. Substantial Presence Test
The Five-Year Exemption for F, J, M, and Q Students
Students on F, J, M, or Q visas get a carve-out. For your first five calendar years in the U.S. under one of these visas, your days don’t count toward the Substantial Presence Test. The IRS calls you an “exempt individual,” which effectively keeps you classified as a non-resident alien.4Internal Revenue Service. Exempt Individual – Who Is a Student
After year five, the exemption expires and the standard day-counting kicks in. A student who stays in the U.S. beyond that point will usually meet the 183-day threshold and become a resident alien, which is when education credits open up.
Filing Form 8843 each year is what preserves your exempt status. The form documents your days of presence and the basis for excluding them.5Internal Revenue Service. About Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition Skip it and the IRS can count all your U.S. days, potentially flipping your tax status earlier than expected and jeopardizing treaty benefits.6Internal Revenue Service. Completing Form 8843
If You’re a Resident Alien: Claiming Education Credits
Two federal credits use the expenses on your 1098-T. Both are available to resident aliens and to non-resident aliens who elect to file jointly with a U.S. citizen or resident spouse. Both are off-limits to non-resident aliens filing on their own.2Internal Revenue Service. Education Credits
American Opportunity Tax Credit
The AOTC is worth up to $2,500 per eligible student. Up to 40% of it (a maximum of $1,000) is refundable, meaning you can receive it even if you owe no tax.7Internal Revenue Service. American Opportunity Tax Credit Qualified expenses include tuition, required fees, and the books, supplies, and equipment needed for coursework, even if you buy them off-campus.8Internal Revenue Service. Publication 970, Tax Benefits for Education
The restrictions matter. The AOTC covers only the first four years of postsecondary education and cannot be claimed for more than four tax years per student. Graduate students who already finished a four-year undergraduate degree are ineligible. The student must be enrolled at least half-time for at least one academic period during the year, and a felony drug conviction disqualifies them.9Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits
The statute also requires the student to have a Social Security Number on the return to claim the AOTC. An ITIN is not sufficient for this credit.
Lifetime Learning Credit
The LLC is worth up to $2,000 per tax return (not per student), calculated as 20% of the first $10,000 in qualified expenses.10Internal Revenue Service. Lifetime Learning Credit It’s non-refundable, so it can reduce your tax to zero but won’t generate a refund on its own. There’s no limit on how many years you can claim it, and it covers undergraduate, graduate, professional, and job-skills courses. Books and supplies qualify only if the school requires you to pay for them directly.8Internal Revenue Service. Publication 970, Tax Benefits for Education The LLC has more flexible identification rules than the AOTC.
Income Limits
Both credits phase out at the same income levels. The full credit is available if your modified adjusted gross income is $80,000 or less ($160,000 for joint filers), shrinks between $80,000 and $90,000 ($160,000 to $180,000 for joint filers), and disappears above the top of that range.9Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits Most international students on stipends or part-time wages fall well below these thresholds. Residency status, not income, is usually the obstacle.
You claim either credit on Form 8863, filed with your Form 1040.11Internal Revenue Service. About Form 8863, Education Credits Keep your 1098-T, book and supply receipts, and scholarship award letters in case the IRS asks for support.
If You’re a Non-Resident Alien: Using the 1098-T to Calculate Taxable Scholarship Income
You can’t claim education credits, but the form still has a job. Scholarships and fellowships are tax-free only to the extent they pay for qualified tuition and required fees. Anything above that, including money used for rent, food, or personal expenses, is taxable income.
Box 1 on the 1098-T shows the qualified expenses the school received payment for. Subtract that from your total scholarship or fellowship amount, and the difference is the portion you owe tax on.
Withholding and Form 1042-S
The default federal withholding rate on taxable scholarship income paid to non-resident aliens is 30%. Students on F, J, M, or Q visas qualify for a reduced 14% rate when the taxable amount is connected to a qualified scholarship or comes from certain qualifying organizations.12Internal Revenue Service. Withholding Federal Income Tax on Scholarships, Fellowships and Grants Paid to Nonresident Aliens
Your school reports this income and any tax withheld on Form 1042-S rather than a W-2 or 1099.13Internal Revenue Service. About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding On your Form 1040-NR, you reconcile the two: the 1098-T shows qualified expenses, the 1042-S shows what was paid and withheld, and the difference produces your taxable amount and any refund of over-withheld tax.
Tax Treaty Benefits
Dozens of U.S. tax treaties contain provisions that reduce or eliminate tax on scholarship and fellowship income. What you can claim depends on your home country. Article 20 of the U.S.-China income tax treaty, for example, exempts scholarship income received by Chinese students temporarily present in the U.S., and that exemption can continue to apply even after the student becomes a resident alien, which is unusual since most treaty benefits end at the residency switch.14Internal Revenue Service. Claiming Treaty Exemption for a Scholarship or Fellowship Grant IRS Publication 901 lists the provisions country by country.
To claim a treaty exemption, file Form 8833 with your return and identify the specific treaty article.15Internal Revenue Service. About Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) Leaving it off can cause the IRS to disallow the exemption.
Two Ways to Unlock Education Credits Earlier
Most international students won’t be able to claim education credits during their first several years in the U.S. There are two main routes that change that.
Residency After Year Five
Once your five-year exempt period expires and you meet the Substantial Presence Test, you’re a resident alien. You file Form 1040 like any U.S. taxpayer, and the tuition on your 1098-T works the same way it would for a citizen. For graduate students who arrived as undergraduates, this often lines up with their fifth or sixth year in the country.
Nonresident Spouse Election
If you’re married to a U.S. citizen or resident alien, Section 6013(g) lets you elect to be treated as a resident alien for the entire tax year by filing a joint return.16Office of the Law Revision Counsel. 26 USC 6013 – Joint Returns of Income Tax by Husband and Wife That unlocks education credits immediately, regardless of how long you’ve been in the U.S.
The trade-off is real. The election subjects the non-resident spouse to U.S. tax on worldwide income, not just U.S.-sourced income. It also carries forward to all future tax years until one spouse revokes it, the couple divorces, or both become non-residents. If the election is ever terminated, the same two individuals can never make it again.16Office of the Law Revision Counsel. 26 USC 6013 – Joint Returns of Income Tax by Husband and Wife Weigh the credit savings against the cost of taxing the non-resident spouse’s global income before making the choice.
Filing Mechanics for International Students
Every international student on an F, J, M, or Q visa has a filing obligation, even those with no income at all.
Non-resident aliens with U.S.-sourced income file Form 1040-NR. The deadline is April 15 if you had wages subject to withholding; June 15 if your only U.S. income is passive (scholarships, fellowships, investment income). An extension to October 15 is available, but any tax owed is still due by the original deadline. Students with no U.S. income still must file Form 8843 to preserve their exempt-individual status.
Resident aliens file Form 1040 by April 15, with the same extension rules as U.S. citizens, and attach Form 8863 to claim education credits.
One warning worth taking seriously: most consumer tax software, including TurboTax, H&R Block, and FreeTaxUSA, does not support Form 1040-NR or Form 8843. Non-resident aliens generally need specialized software built for non-resident filings or a tax professional familiar with international student returns. Filing a 1040 when you should have filed a 1040-NR, or claiming an education credit you aren’t entitled to, is a common and costly error that can lead to IRS notices and penalties later.