1098-T School Form: Boxes, Education Credits, and Form 8863

The 1098-T form is the tuition statement your college or university sends each January that reports what you paid in qualified tuition and related expenses during the prior calendar year, along with any scholarships or grants the school processed on your behalf. You use it to claim one of two education tax credits worth up to $2,500 per student. Schools must send it by January 31, and a copy goes to the IRS, so the figures you put on your return get checked against what the school reported.¹

A few students won’t receive one. If scholarships covered your qualified tuition in full, if you were enrolled only in non-credit courses, or if you’re a qualified nonresident alien who didn’t request the form, the school isn’t required to issue it.² You may still be able to claim a credit; see the last section.

What Each Box Reports

The numbered boxes cover the financial activity between you and the school for the year. Reading them carefully saves problems at filing time.

Box 1: Total payments the school received for qualified tuition and related expenses. This is money actually paid, not billed.³
Box 4: Adjustments made this year to qualified tuition reported on a prior year’s form. A refund of previously reported tuition shows up here and can trigger a recapture of a credit you already claimed.
Box 5: Total scholarships or grants the school processed during the year.
Box 6: Reductions to scholarships or grants reported on a prior year’s form.
Box 7: Checked if Box 1 payments include amounts for an academic period starting January through March of the following year.
Box 8: Checked if you were enrolled at least half-time for at least one academic period during the year. This matters for the American Opportunity Tax Credit.
Box 9: Checked if you were a graduate student.

Box 2 is generally blank. Schools once had the option of reporting amounts billed instead, but current rules require the actual-payments figure in Box 1.

Qualified Expenses vs. Costs That Don’t Count

Box 1 only shows qualified tuition and related expenses. Qualified expenses include tuition, mandatory enrollment fees, and student activity fees that all students must pay. For the American Opportunity Tax Credit, books, supplies, and equipment required for your courses also count, even if you bought them off-campus. The Lifetime Learning Credit is narrower: course materials only qualify if the school requires you to buy them from the institution as a condition of enrollment.⁴

These common costs are excluded, even when the school bills them alongside tuition:⁴

Room and board
Health insurance and student health fees
Transportation
Personal living expenses

Your total university bill might be $25,000, but if $12,000 of that is a dorm room and meal plan, only $13,000 feeds into the credit calculation. Look at your itemized bill, not the total, before entering numbers on your return.

When Scholarships Become Taxable

If the amount in Box 5 exceeds qualified tuition in Box 1, the difference is generally taxable income. Scholarship money that pays for room, board, travel, or other non-qualified expenses counts as ordinary income you must report.⁵

Report the taxable portion on Schedule 1 of Form 1040, Line 8, unless it was already included in a W-2. The form won’t do this math for you. Compare Box 5 against your actual qualified expenses (which can differ from Box 1 if you paid for required books separately) and report any excess. Students with generous aid packages and low tuition sometimes owe tax they didn’t see coming.

The Two Education Credits

American Opportunity Tax Credit

The AOTC is worth up to $2,500 per eligible student per year. The math: 100 percent of the first $2,000 in qualified expenses, plus 25 percent of the next $2,000.⁶ Spend $4,000 or more on qualified tuition, fees, and required materials, and you hit the maximum.

Up to 40 percent of the credit (a maximum of $1,000) is refundable, meaning you can receive it even if you owe no federal income tax.²

To qualify:

The student must be pursuing a degree or recognized credential.
The student must be enrolled at least half-time for at least one academic period during the year.
The credit covers only the first four years of post-secondary education.
The student cannot have a federal or state felony drug conviction as of year-end.⁷

You can claim the AOTC for a maximum of four tax years per student, and those years do not need to be consecutive.

Lifetime Learning Credit

The LLC is worth up to $2,000 per tax return (not per student). It equals 20 percent of the first $10,000 in qualified expenses paid for all eligible students on the return.²

The eligibility rules are looser. No cap on the number of years, no requirement to pursue a degree, no minimum enrollment, and no drug-conviction restriction. Graduate students, professionals in continuing education, and people picking up a skill at a community college all qualify.⁷

The trade-off: the LLC is not refundable. It can zero out your tax bill but won’t produce a refund on its own. You cannot claim both credits for the same student in the same year, though you can claim the AOTC for one student and the LLC for another on the same return.

Income Phase-Outs

Both credits phase out at higher incomes. For tax year 2026, the ranges are identical for each credit:⁸

Single filers: full credit with modified AGI up to $80,000, partial from $80,000 to $90,000, none above.
Married filing jointly: full credit with MAGI up to $160,000, partial from $160,000 to $180,000, none above.⁷

If you’re married, you must file jointly to claim either credit. Married-filing-separately filers are locked out entirely.

Parent or Student: Who Actually Claims It

If the student is claimed as a dependent on a parent’s return, the parent claims the education credit. The student cannot claim it on their own return while being listed as a dependent elsewhere.²

Expenses paid by the student, or by a third party on behalf of a dependent student, are treated as paid by the parent for credit purposes.⁹ If a grandparent writes a tuition check directly to the school, the parent claiming the dependent gets the credit.

Students who are not dependents (typically age 24 or older, married, or self-supporting) claim the credit on their own return. Since the phase-outs apply to whoever claims the credit, some families are better off not claiming the student as a dependent at all. Run both scenarios.

Coordinating With a 529 Plan

You cannot use the same dollar of tuition for both a tax-free 529 withdrawal and an education credit. The IRS calls this the no-double-benefit rule. If you paid $15,000 in qualified tuition and pulled $11,000 from a 529, only the remaining $4,000 counts toward your credit.⁹

A common strategy: set aside $4,000 in expenses for the AOTC (enough to max out the $2,500 credit) and cover the rest from the 529. That $4,000 of tuition generates $2,500 in credits, with up to $1,000 refundable, which almost always beats using 529 dollars for those same expenses. Do the math before requesting distributions.

Filing With Form 8863

To claim either credit, complete IRS Form 8863, Education Credits, and attach it to your Form 1040.¹⁰ The form calculates each credit separately for each student. You’ll need the school’s employer identification number, which appears on your 1098-T.

One detail from the Form 8863 instructions matters: the amount on your 1098-T may not equal your total qualified expenses. If you paid for required books or supplies out of pocket for a student claiming the AOTC, those costs won’t appear in Box 1, but you can still include them in the credit calculation. Keep receipts.¹¹

After you file, the IRS cross-references your claimed expenses against the data the school reported. Mismatches can produce a notice or delay your refund. Check your 1098-T against your own payment records before you file.

If Your 1098-T Is Wrong or Missing

Schools sometimes report incorrect amounts, especially when payments straddle calendar years or aid gets adjusted after the form is generated. If Box 1 or Box 5 doesn’t match your records, contact the bursar’s office and request a corrected form. Filing with numbers you know are wrong invites problems.

If you never received a 1098-T, you may still claim a credit. The IRS instructs you to contact the school, document the request, and be prepared to prove enrollment at an eligible institution and substantiate your payments on your own.² Bank statements, cancelled checks, and online records from the school’s payment portal all work as backup. The 1098-T is the standard support, not the only support.

1
Internal Revenue Service. About Form 1098-T, Tuition Statement
2
Internal Revenue Service. Education Credits – AOTC and LLC
3
Internal Revenue Service. Instructions for Forms 1098-E and 1098-T – Specific Instructions for Form 1098-T
4
Internal Revenue Service. Qualified Education Expenses
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Internal Revenue Service. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants
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Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits
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Internal Revenue Service. Education Credits – Questions and Answers
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Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
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Internal Revenue Service. Publication 970 – Tax Benefits for Education
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Internal Revenue Service. Form 8863 – Education Credits
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Internal Revenue Service. Instructions for Form 8863