What Is a 1099-T? The 1098-T Form, Credits, and Scholarships

There is no IRS form called the 1099-T. The document people mean when they type that into a search bar is Form 1098-T, Tuition Statement, which your college or university sends each January to report qualified tuition you paid and scholarships or grants you received.¹ Those numbers feed the federal education tax credits, which are worth up to $2,500 per student per year.

Why It’s a 1098, Not a 1099

The confusion is understandable. The 1099 family reports income you receive: freelance pay, interest, dividends. Education costs don’t fit that pattern because they flow the other way. Payments you make for tuition belong to the 1098 series, alongside forms for mortgage interest and student loan interest. The correct title of the education form is IRS Form 1098-T.

Federal law requires every eligible educational institution to file a 1098-T for each enrolled student with a reportable transaction during the calendar year.² A copy goes to you and a copy goes to the IRS, which uses it to cross-check the credits and deductions on your return. Schools must get the form to students by January 31 of the following year.³

What the Form Actually Reports

Two boxes carry most of the weight. Box 1 shows the total payments your school received during the calendar year for qualified tuition and related expenses. Box 5 shows the total scholarships or grants the school processed on your behalf in the same period.³ The gap between them is roughly your out-of-pocket cost, and that gap is what the IRS looks at when you claim a credit.

Other boxes track adjustments from prior years. If your school refunded tuition or changed a scholarship amount after you already filed, those adjustments appear here so the IRS can decide whether you owe back part of a credit you already received.

What Counts as a Qualified Expense

Box 1 only captures tuition and fees required for enrollment or attendance. A lot of college costs that feel like they should count don’t. Room and board, health insurance, medical fees, and transportation are excluded.³ Courses in sports, games, or hobbies are also excluded unless the course is part of your degree program or improves job skills.

Books, supplies, and equipment are handled differently depending on which credit you claim. For the American Opportunity Tax Credit, course materials count as qualified expenses even if you bought them at an off-campus bookstore. For the Lifetime Learning Credit, those same materials only qualify if the school required you to buy them directly from it as a condition of enrollment.⁴

Who Should Receive One

You should get a 1098-T if you were enrolled for at least one academic period at a school that participates in federal student aid programs administered by the Department of Education.³ If your school doesn’t participate, it isn’t required to issue the form at all.

Even at a qualifying school, some students won’t get one. The institution doesn’t have to send a 1098-T if:

Your qualified tuition and fees were entirely paid by scholarships or waived.
A formal billing arrangement between the school and your employer or a government agency (such as the Department of Veterans Affairs) covers your costs, and the school doesn’t maintain a separate financial account for you.
You’re a nonresident alien and haven’t specifically requested the form.
You’re enrolled only in courses that don’t award academic credit.

The form primarily exists for students who might claim federal education credits, so if your situation doesn’t fit that profile, the school may not generate one.⁴

If the Form Is Missing or Wrong

If January 31 passes and no 1098-T has arrived, check your school’s online student portal before assuming anything went wrong. Many institutions post the form there instead of mailing it. If the school confirms it should have sent one but didn’t, ask in writing and keep the correspondence.⁵

You can still claim education credits without the form in hand. The IRS lets you file based on your own records as long as you can show the student was enrolled at an eligible institution and can document the qualified expenses you paid. Tuition receipts, bank statements, and billing records from the school all work.⁴ If the form arrives later with numbers different from what you reported, file an amended return using Form 1040-X.

If a 1098-T shows incorrect amounts, contact the school and ask for a corrected form. Don’t file using numbers you know are wrong. That creates a mismatch with the data the IRS already has, and mismatches produce notices.

When Scholarships Become Taxable

Here’s the surprise the 1098-T often delivers. If Box 5 exceeds Box 1, the excess may be taxable income. Scholarship money used for tuition, required fees, and required course materials is generally tax-free for degree-seeking students. Any portion spent on room, board, travel, or optional expenses is taxable.⁶

Money paid to you for teaching, research, or other services required as a condition of a scholarship is also taxable, because it’s treated as compensation rather than educational assistance. A narrow exception exists for certain military and National Health Service Corps scholarship programs. Students with generous aid packages who assume none of it is taxable are the ones who tend to get caught here.

The Credits the 1098-T Supports

From your side of the transaction, the point of the 1098-T is that it feeds two federal education tax credits. Both directly reduce the tax you owe, unlike deductions, which only reduce taxable income. You claim either credit by filing Form 8863, Education Credits, with your return.⁷

American Opportunity Tax Credit

The AOTC is worth up to $2,500 per eligible student per year: 100% of the first $2,000 in qualified expenses plus 25% of the next $2,000.⁸ Forty percent of it (up to $1,000) is refundable, meaning you can receive it even if you owe no federal income tax. For students with small tax bills, that refundable piece is real cash.

Eligibility is stricter than the LLC’s. The student must be pursuing a degree or recognized credential, enrolled at least half-time for at least one academic period during the tax year, and must not have completed the first four years of higher education.⁹ You can only claim the AOTC for a maximum of four tax years per student. Students with a felony drug conviction are ineligible.

The full AOTC is available to single filers with modified adjusted gross income of $80,000 or less, and joint filers at $160,000 or less. It phases out completely at $90,000 for single filers and $180,000 for joint filers.⁸

Lifetime Learning Credit

The LLC is worth up to $2,000 per return (not per student), calculated as 20% of the first $10,000 in qualified education expenses.¹⁰ The LLC is entirely nonrefundable: it can reduce your tax bill to zero, but it won’t produce a refund on its own.

The lower dollar cap comes with far more flexibility. There’s no year limit, no half-time enrollment requirement, and the student doesn’t need to be pursuing a degree. Graduate students, professionals taking continuing education, and workers picking up new job skills all qualify. It’s the credit that covers you after the AOTC’s four-year window closes.

The LLC’s income phase-out ranges match the AOTC: full credit at MAGI of $80,000 or less for single filers and $160,000 for joint filers, phasing out entirely at $90,000 and $180,000. These thresholds are not indexed for inflation.¹¹

Parent or Student: Who Claims the Credit

The rule is straightforward and inflexible. If someone else claims you as a dependent, you cannot claim an education credit on your own return.⁴ The person claiming you as a dependent claims the credit, even if you personally paid the tuition bill.

The IRS treats expenses paid by a dependent student as if the parent paid them. A 20-year-old who pays $8,000 in tuition from summer job earnings but is still claimed on a parent’s return doesn’t get the credit. The parent does. The alternative is for the parent to stop claiming the student as a dependent, which trades away the dependency benefits, so it’s worth running the numbers both ways.

Coordinating With 529 Plans and Other Aid

You cannot use the same dollar of expense to claim two different tax benefits. The IRS calls this the “no double benefit” rule, and it applies across education credits, 529 plan distributions, Coverdell ESA withdrawals, and tax-free scholarships.¹²

In practice, start with total qualified education expenses, then subtract tax-free assistance: Pell Grants, tax-free scholarship portions, employer-provided educational assistance, veterans’ benefits, and tax-free 529 distributions. Only the remainder can support a credit claim. You also cannot claim both the AOTC and the LLC for the same student in the same year, though you can claim different credits for different students on the same return.¹²

Families using a 529 have to be careful. A common approach is to pay enough tuition from non-529 sources to maximize the AOTC, then use 529 funds for what’s left. Paying everything from a 529 and then claiming a credit on those same expenses is exactly what the double-benefit rule blocks.

Don’t Confuse It With Form 1098-E

While sorting through education tax documents, you may also receive Form 1098-E, Student Loan Interest Statement. That form reports how much student loan interest you paid during the year, not tuition. Your loan servicer must send you a 1098-E if you paid $600 or more in interest during the calendar year.³ The student loan interest deduction is a separate benefit with its own income limits, so getting both forms in the same envelope doesn’t create a conflict.

1
Internal Revenue Service. About Form 1098-T, Tuition Statement
2
Office of the Law Revision Counsel. 26 USC 6050S – Returns Relating to Higher Education Tuition and Related Expenses
3
Internal Revenue Service. Instructions for Forms 1098-E and 1098-T (2025)
4
Internal Revenue Service. Education Credits – AOTC and LLC
5
Internal Revenue Service. How to File When Taxpayers Have Incorrect or Missing Documents
6
Internal Revenue Service. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants
7
Internal Revenue Service. Instructions for Form 8863 (2025)
8
Internal Revenue Service. American Opportunity Tax Credit
9
Internal Revenue Service. Education Credits – Questions and Answers
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Internal Revenue Service. Lifetime Learning Credit
11
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
12
Internal Revenue Service. No Double Education Benefits Allowed