Do I Have to Report Form 1098-T on My Taxes?

You do not have to report Form 1098-T on your taxes in the sense of attaching it or entering it as income. Your school files a copy with the IRS, and the form is informational. But two situations make the numbers on it matter: if you want to claim an education tax credit worth up to $2,500, you’ll need the form’s figures to fill out Form 8863; and if your scholarships in Box 5 exceeded your qualified tuition in Box 1, part of that scholarship money may be taxable income you do have to report.

Why the Form Is Informational

Your school issues a 1098-T for each year it processes a reportable transaction on your account. It goes to you and to the IRS at the same time, so the agency already has the data. Nothing about the form itself requires action on your return. You never staple it to your 1040.

The form becomes useful when you want to claim a benefit tied to the amounts it reports, or when the numbers reveal income you owe tax on. Everything below is about those two cases.

Using the 1098-T to Claim an Education Credit

If you’re claiming either the American Opportunity Tax Credit or the Lifetime Learning Credit, you file Form 8863 with your return. Form 8863 asks whether you received a 1098-T and requires your school’s employer identification number, which appears on the form.¹ The 1098-T supplies the starting numbers, but the IRS expects you to calculate actual qualified expenses from your own records, not just copy Box 1.²

The American Opportunity Tax Credit

The AOTC is worth up to $2,500 per eligible student per year. It equals 100% of the first $2,000 in adjusted qualified expenses plus 25% of the next $2,000, so $4,000 in qualifying costs gets you the full amount.³ Adjusted qualified expenses means your qualified costs minus tax-free scholarships and grants.

Up to 40% of the credit, capped at $1,000, is refundable, meaning it can come back to you even if you owe no tax. To qualify, the student must be pursuing a degree or recognized credential, be enrolled at least half-time for at least one academic period during the year, and not have finished the first four years of higher education. The AOTC can only be claimed for four tax years per student, counting any prior Hope Credit years, and the student must not have a felony drug conviction at year-end.⁴

The 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 adjusted qualified expenses.⁵ It’s nonrefundable, so it can zero out your tax but won’t produce a refund on its own.

The tradeoff is broader eligibility. Courses taken to improve job skills count, no degree program is required, there’s no half-time enrollment requirement, and there’s no four-year cap.⁶ That makes the LLC the usual pick for graduate students, part-timers, and working adults taking continuing education.

Income Limits and Choosing Between Them

Both credits phase out at the same income levels: single filers between $80,000 and $90,000 modified adjusted gross income, joint filers between $160,000 and $180,000. Above those ranges, neither credit is available.⁴⁷

You can only claim one credit per student per year. With two students in the family, you can claim the AOTC for one and the LLC for the other on the same return.

Student or Parent: Who Claims It

Dependency status controls this, not who wrote the check. If the student is claimed as a dependent on someone else’s return, only that person can claim the credit, even if the student paid tuition out of their own earnings or student loan proceeds. If the student is not claimed as a dependent, only the student can claim the credit, even if a parent paid the whole bill. Third-party payments on behalf of an independent student are treated as if the student made them.³

A student who could be claimed as a dependent but simply isn’t claimed still can’t take the credit. The test is eligibility to be claimed, not whether anyone actually did.

When Scholarships Exceed Tuition, You Do Have to Report Something

If Box 5 is larger than Box 1, don’t assume the 1098-T is nothing to worry about. Scholarships are tax-free only to the extent they pay for tuition and required fees, books, supplies, and equipment. Any portion used for room and board, travel, or other living expenses is taxable. Amounts received as payment for teaching or research services required by the scholarship are taxable no matter how you spent the money.⁸

To check whether you owe, start with Box 5 and subtract all your qualified education expenses, including required books and supplies you paid for separately that don’t appear in Box 1. A positive balance is likely taxable. You report it on Schedule 1 (Form 1040), Line 8, unless it was already included on a W-2.⁸

A full-ride scholarship that also covers housing routinely produces several thousand dollars of taxable income. Since the IRS already has the 1098-T, ignoring the mismatch tends to generate a notice later.

What the Key Boxes Actually Show

Box 1 shows total payments the school received during the calendar year for qualified tuition and related expenses. Box 5 shows scholarships and grants the school administered and processed for you. Box 4 shows adjustments to a prior year’s tuition, often from a refund, which can increase your tax for the earlier year. Box 6 shows adjustments to a prior year’s scholarships, and depending on the amounts, that may call for an amended return (Form 1040-X) for the affected year.⁹

Box 7, if checked, tells you that some of the payments in Box 1 cover a term starting between January and March of the following year. That affects which tax year you claim the credit for.¹⁰

Qualified expenses for the credits include tuition and required fees, but not room and board, insurance, medical expenses, or transportation, even when the school requires them.³ Required books and supplies count as qualified expenses even though the school won’t include them in Box 1 if you bought them elsewhere. That’s the main reason your actual qualifying total often runs higher than Box 1.

If You Never Received a 1098-T

Schools aren’t required to issue the form in every case. Exceptions include nonresident alien students (unless requested), students in courses that don’t carry academic credit, students whose tuition was entirely covered by scholarships, and students under a formal billing arrangement where an employer or government agency pays the school directly.¹⁰

If your school wasn’t required to issue the form, you can still claim an education credit as long as you can show enrollment at an eligible institution and back up your payments with your own documentation. If the school was required to issue it but didn’t, request it after January 31 and cooperate with the school’s efforts to gather the information before you file.¹¹

If the Form Is Wrong

Schools do make mistakes. Late payments, mid-year scholarship changes, or expenses categorized differently in the school’s system can throw off the numbers. The form itself has a CORRECTED checkbox for reissues.⁹

If your records don’t match the form, contact the financial office and ask for a corrected version. While you wait, complete Form 8863 using your own records rather than Box 1.² Keep bursar statements, receipts for required books and supplies, canceled checks, and records of any scholarship amounts not reported by the school. If the IRS questions the claim later, that paperwork is what settles it.¹²

A Note on 529 Plans

If you’re paying tuition with both a 529 distribution and out-of-pocket money, the same dollar of qualified expense can’t support both a tax-free 529 withdrawal and an education credit. The usual approach is to reserve at least $4,000 of qualifying costs for the AOTC and apply the 529 distribution to what’s left after tax-free scholarships and the credit expenses. Publication 970 shows the math with worked examples.³ Getting the allocation wrong can make part of the 529 earnings taxable when it didn’t have to be.

1
Internal Revenue Service. Form 8863 – Education Credits (American Opportunity and Lifetime Learning Credits)
2
Internal Revenue Service. 2025 Instructions for Form 8863
3
Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education
4
Internal Revenue Service. American Opportunity Tax Credit
5
Internal Revenue Service. Lifetime Learning Credit
6
Internal Revenue Service. Education Credits: American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC)
7
Office of the Law Revision Counsel. 26 U.S. Code 25A – American Opportunity and Lifetime Learning Credits
8
Internal Revenue Service. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants
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Internal Revenue Service. Form 1098-T Tuition Statement 2026
10
Internal Revenue Service. Instructions for Forms 1098-E and 1098-T (2026)
11
Internal Revenue Service. Instructions for Form 8863 (2025)
12
Internal Revenue Service. Education Credits: Questions and Answers