Can a Parent Claim a Child’s 1098-T on a Tax Return?

A parent can put a child’s 1098-T on their own tax return, but only if the parent claims that child as a dependent. The 1098-T is just the school’s reporting form; it does not decide who gets the tax break. Whoever claims the student as a dependent is the one who claims the education credit tied to that 1098-T, worth up to $2,500 a year, no matter who actually paid the tuition bill. If no one claims the student as a dependent, the student claims the credit on their own return.¹

Does Your Child Qualify as Your Dependent?

Everything turns on this question. Most college-age children are claimed under the Qualifying Child test, which has four requirements. The student must be your child, stepchild, sibling, or a descendant of one of those. The student must be under 24 at the end of the tax year and enrolled full-time for at least five months. The student must have lived with you more than half the year, with time away at school counting as time at home. And the student cannot have provided more than half of their own support.²

The support test is the one families stumble on. Student loans in the student’s name count as the student’s own support if the student actually spends the money on their own support. Scholarships are excluded from the support math entirely, so a full-ride scholarship does not block you from claiming the student.³

If your student is 25 or older, or has dropped below full-time, the Qualifying Relative test is the backup. It caps the student’s gross income (currently $5,050) and requires you to have provided more than half of total support including housing, food, tuition, and medical care.² A student with a real job usually blows past that income limit.

What You Actually Get by Claiming the 1098-T

The 1098-T feeds one of two federal education credits, and you can claim only one per student per year.⁴

American Opportunity Tax Credit

The AOTC is worth up to $2,500 per student per year: 100% of the first $2,000 in qualified expenses, plus 25% of the next $2,000. It applies only during the student’s first four years of college, and the student must be pursuing a degree at least half-time. Forty percent of the credit, up to $1,000, is refundable, meaning you can receive it as cash even if you owe no tax.⁵

Lifetime Learning Credit

The LLC covers 20% of the first $10,000 in qualified expenses, for a maximum of $2,000 per tax return (not per student). It has no four-year limit, works for undergraduate, graduate, or professional courses, and even covers classes taken to improve job skills. It is entirely nonrefundable.⁶

Income Phase-Outs

Both credits phase out at the same income levels. You get the full amount if your modified adjusted gross income is $80,000 or less ($160,000 for joint filers). The credit shrinks between $80,000 and $90,000 ($160,000 to $180,000 jointly) and disappears above $90,000 ($180,000 jointly). These thresholds are not indexed for inflation. Neither credit is available if you file married filing separately.⁵

What Counts as a Qualified Expense

Box 1 of the 1098-T reports tuition and required fees paid to the school. Both credits cover those. The difference is in course materials: for the AOTC, books and supplies count even if you bought them from an outside retailer; for the LLC, they count only if the school requires you to buy them from the institution.⁴ Room and board, insurance, transportation, and medical expenses never qualify, even when the school bills them with tuition.⁷

How You Report It on Your Return

You report the qualified expenses on Form 8863, Education Credits, and attach it to your Form 1040.⁸ The IRS treats all of the student’s qualified expenses as paid by whoever claims the dependent, so it does not matter whether the tuition check came from you or the student. Your return is the only one that can carry the credit.¹

If your student files their own return, they must check the box indicating they can be claimed as a dependent on someone else’s return. That checkbox disqualifies them from claiming any education credit themselves.¹

Before you calculate the credit, subtract any tax-free educational assistance the student received: scholarships, grants, employer tuition benefits, veterans’ education benefits. Only what remains counts as qualified expenses for the credit.⁹

When Letting the Student Claim It Saves Money

Here is the planning move most families miss. If your income is above $90,000 ($180,000 jointly), you are fully phased out of both credits. Claiming the student as a dependent locks the credit out for everyone, because the student cannot claim it while they are your dependent.

The dependency claim is optional. If you choose not to claim a qualifying child, the student can claim the education credit on their own return, as long as the student’s income falls below the phase-out. The IRS says this plainly: if you do not claim a dependent who is an eligible student even though you are entitled to, only that dependent can claim the credit.⁹

You give up the $500 credit for other dependents on your own return by doing this. But a $2,500 AOTC on the student’s return, or even just the $1,000 refundable portion, often more than covers the loss. Run the numbers both ways. The decision can swing a family’s total tax bill by more than $2,000.

And if the parent pays the tuition but no one claims the student as a dependent, the IRS treats the payment as a gift to the student. The student is considered to have paid the school and uses those expenses for the credit on their own return. The parent gets nothing from the payment itself.⁹ The same rule applies when a grandparent pays the school directly.

Divorced or Separated Parents

Divorce complicates this because the dependency claim and the education credit always travel together, even when other credits do not. A custodial parent can sign Form 8332 to release the dependency claim to the noncustodial parent, which lets the noncustodial parent take the child tax credit and the credit for other dependents.¹⁰

The education credit follows whoever actually lists the student as a dependent on their return. If the noncustodial parent claims the dependency through Form 8332, that parent also gets the education credit. If neither parent claims the student, the student claims it.¹ When one parent is phased out of the credit and the other is not, releasing the dependency claim can shift the credit to the parent who can actually use it. Divorce agreements should spell out who claims the child for education credit years specifically.

Coordinating With 529 Plans and Scholarships

You can take a tax-free 529 distribution and claim an education credit in the same year, but not for the same dollars of expense. No double-counting.⁹

The practical sequence: allocate the first $4,000 of tuition to the AOTC (that generates the full $2,500 credit), then use 529 money for the rest, including room and board, which 529s cover but the credit does not. Pay everything from the 529 first and you can accidentally zero out the expenses you needed for the credit.

Scholarships need their own calculation. You reduce qualified expenses by the tax-free portion of any scholarship before computing the credit. A legitimate workaround: the student can elect to treat some scholarship money as taxable income on their own return, which preserves those expenses as “paid” for credit purposes. For a student in a low bracket, paying a little tax on scholarship income can unlock a much larger credit.¹¹

If the 1098-T Is Missing or Wrong

Schools do not have to issue a 1098-T for nonresident alien students (unless the student requests one), for students whose tuition was fully covered by scholarships, or when expenses were paid through a formal billing arrangement with an employer or government agency.¹²

No form does not automatically mean no credit. You can still claim the AOTC without a 1098-T if the school was not required to issue one or if the school closed before sending it. You will need to show the student was enrolled at an eligible institution and prove the expenses with receipts, billing statements, or bank records.¹²

If Box 1 on the 1098-T looks wrong, do not just copy the number onto your return. The 1098-T is an informational starting point. Your own records of what you actually paid for qualified expenses govern the credit. Ask the school’s bursar for a corrected form if the gap is material.

Keep the Records

The IRS audits education credit claims, and the consequences of losing one are real. If you cannot back up your claim, you owe back the credit with interest, and you can face an accuracy or fraud penalty plus a ban from claiming the AOTC for two to ten years.⁴

Hold onto tuition receipts, billing statements, scholarship award letters, and the 1098-T itself for at least three years after you file, longer if you plan to claim the AOTC across all four eligible years. When you are the one claiming the credit, you are the one who needs the paperwork, not your student.

1
Internal Revenue Service. 2025 Instructions for Form 8863
2
Internal Revenue Service. Dependents
3
Internal Revenue Service. Dependents (Publication 4491)
4
Internal Revenue Service. Education Credits: American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC)
5
Internal Revenue Service. American Opportunity Tax Credit
6
Internal Revenue Service. Lifetime Learning Credit
7
Internal Revenue Service. Qualified Education Expenses
8
Internal Revenue Service. Form 8863 – Education Credits (American Opportunity and Lifetime Learning Credits)
9
Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education
10
Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information
11
Internal Revenue Service. No Double Education Benefits Allowed
12
Internal Revenue Service. Education Credits: Questions and Answers