If a parent or another taxpayer claims you as a dependent, you do not file the 1098-T for an education credit on your own return. The person who claims you uses the tuition and scholarship figures from your 1098-T on their return, as though they paid those expenses directly, and any American Opportunity or Lifetime Learning Credit belongs to them. This is true even if the tuition came out of your own bank account.1Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits
You still keep the form. You hand it to whoever claims you, along with receipts for required books or supplies the school didn’t bill directly. Your name and Social Security number appear on the 1098-T because you’re the student, but for credit purposes the form travels with the dependency.
The Trap: “Could Claim” Is Enough to Block You
Families lose money here every year. The rule isn’t whether your parent actually claims you — it’s whether they could. If your parent meets the tests to claim you as a dependent but chooses not to, you are still barred from taking the education credit on your own return. The credit goes unclaimed, and nobody gets it.2Internal Revenue Service. Education Credits – Questions and Answers
A parent qualifies to claim you if you’re under 19, or under 24 and a full-time student; you lived with them more than half the year; you didn’t provide more than half your own support; and you’re not filing a joint return with a spouse except to claim a refund.3Internal Revenue Service. Dependents
If those tests are met, the practical answer is almost always for the parent to claim both the dependency and the credit on the same return. Run the numbers together before filing. In nearly every case the combined tax bill is lowest when the parent takes both.
What the Parent Does with Your 1098-T
Two boxes on the form do the work. Box 1 shows the payments the school received for qualified tuition and related expenses during the calendar year. Box 5 shows scholarships and grants the school administered during the same period. Subtract Box 5 from Box 1 to get the net qualified expense.4Internal Revenue Service. About Form 1098-T, Tuition Statement
Required books and supplies the school didn’t charge for can be added to that figure when the credit being claimed is the American Opportunity Tax Credit. Keep the receipts. The IRS asks for them when claimed expenses run higher than what the 1098-T shows, and undocumented book expenses are the most common reason families lose credits during review.5Internal Revenue Service. Instructions for Forms 1098-E and 1098-T
Room and board, insurance, student health fees, and transportation don’t qualify, even when the school bills them and even when a scholarship pays them.6Internal Revenue Service. Qualified Education Expenses
Only one person claims the credit for a given student in a given year. If both parent and student file for it, the IRS disallows the duplicate and charges interest on the resulting underpayment. That interest rate sat at 7% for the first quarter of 2026.7Internal Revenue Service. Quarterly Interest Rates
When You Still File Your Own Return as a Dependent
Being claimed as a dependent doesn’t always mean you skip filing. If Box 5 exceeds Box 1 — scholarships and grants larger than qualified tuition — the excess is taxable income the student reports, not the parent. This is common when scholarship money covers room and board, which are not qualified expenses.8Internal Revenue Service. Publication 970 – Tax Benefits for Education
A dependent under 65 and not blind must file when unearned income exceeds $1,350 (2025 threshold; the 2026 figure may adjust slightly for inflation). Taxable scholarship amounts count as unearned income for this test. Report the taxable portion on Schedule 1 of Form 1040, line 8r.9Internal Revenue Service. Check if You Need to File a Tax Return
So the split works like this: the parent files the credit using your 1098-T on their return; you file your own return only to report any taxable scholarship income. The two returns cover different pieces of the same form.
Which Credit the Parent Claims
Form 8863 offers two choices. The parent picks one per student per year.10Internal Revenue Service. Education Credits – AOTC and LLC
American Opportunity Tax Credit
Worth up to $2,500 per eligible student. It covers 100% of the first $2,000 in qualified expenses and 25% of the next $2,000, capping qualified expenses at $4,000. The student must be in their first four years of postsecondary education and enrolled at least half-time for at least one academic period.2Internal Revenue Service. Education Credits – Questions and Answers
Forty percent of the AOTC (up to $1,000) is refundable. When a parent claims it for a dependent, the parent receives the refundable portion. Certain age and support rules can block the refundable portion for a young filer claiming it independently, which is another reason the parent-claims-it arrangement usually produces the better result.11Internal Revenue Service. American Opportunity Tax Credit
The credit phases out between $80,000 and $90,000 of modified adjusted gross income for single filers, and between $160,000 and $180,000 for joint filers. A felony drug conviction disqualifies the student from the AOTC.
Lifetime Learning Credit
Worth up to $2,000 per return (not per student), equal to 20% of the first $10,000 in qualified expenses. No year limit, no half-time requirement, no degree requirement. Graduate coursework qualifies, and so does a single class taken to improve job skills. The LLC is nonrefundable, so it can bring tax to zero but not below.12Internal Revenue Service. Lifetime Learning Credit
Phase-out ranges match the AOTC. A parent with two children in college can claim the AOTC for one and the LLC for the other, but cannot claim both credits for the same student in the same year.13Internal Revenue Service. No Double Education Benefits Allowed
If a 529 Plan Paid the Tuition
The same dollar of tuition cannot support both a tax-free 529 withdrawal and an education credit. Expenses have to be split: some go against the 529 distribution, some support the credit.13Internal Revenue Service. No Double Education Benefits Allowed
The practical move is to set aside at least $4,000 of qualified expenses (the AOTC cap) paid from non-529 sources, then use the 529 for the rest of tuition and for room and board. If the student also has a tax-free scholarship, the 10% penalty on nonqualified 529 distributions is waived up to the scholarship amount, though the earnings portion of that distribution is still taxable.14Internal Revenue Service. 529 Plans – Questions and Answers