What Is the 1098-T Form? Tuition, Credits, and 529 Plans

The 1098-T form is the tuition statement your college or university sends each year reporting what you paid in qualified tuition and what you received in scholarships or grants. Schools must send it by January 31 following the tax year, and you use it to claim federal education tax credits worth up to $2,500 per student. The IRS receives the same data and uses it to verify education expenses on individual returns.

What the Boxes Actually Tell You

Most of the form is administrative. Two boxes carry the numbers that drive your tax credit, and the rest describe your enrollment.

Box 1 shows the total payments your school received during the calendar year for qualified tuition and related expenses, minus any refunds issued that same year. Qualified expenses generally include tuition, mandatory enrollment fees, and required course charges like lab fees. Box 1 reflects payments the school actually received, not amounts billed.¹

Box 5 shows the total scholarships or grants your school processed on your behalf during the year.¹ When calculating your credit, you generally subtract Box 5 from Box 1 to find your net qualified expenses. If scholarships exceeded qualified tuition, the surplus may count as taxable income depending on how you used the funds.²

The remaining boxes provide context. Box 4 shows adjustments to qualified tuition from a prior year, such as a refund this year for courses paid for earlier. Box 6 shows reductions to scholarships reported in a prior year. Box 7 is a checkbox indicating that Box 1 includes payments for an academic period starting in January through March of the following year, which is common when spring tuition is paid in December. Box 8 is checked if you were enrolled at least half-time during any academic period beginning in the tax year, and Box 9 is checked if you were in a graduate program.³ Box 2 is intentionally blank; federal rules now require every school to report payments received in Box 1.

Who Gets a 1098-T

Any school participating in federal student aid programs, including colleges, universities, and vocational schools, must send a 1098-T to each enrolled student who had a reportable financial transaction during the tax year.⁴ If you were enrolled for at least one academic period and made payments toward qualified tuition, you should receive one. Schools may deliver the form electronically, but they must mail a paper copy unless you have consented to electronic-only delivery.

Schools are not required to issue the form in several situations:

Qualified tuition was entirely covered by scholarships, grants, or institutional waivers, leaving zero net payment.³
You are a nonresident alien student, unless you specifically request the form.
The courses carried no academic credit, such as non-credit continuing education or audited classes.
Your tuition is covered through a formal billing arrangement between the school and an employer or a government agency such as the Department of Veterans Affairs.

You can still claim an education credit without a 1098-T if the school was not required to issue one. You will need records showing enrollment at an eligible institution and proof of payment for qualified expenses.²

How You Use the Form: Two Education Credits

The 1098-T supports two federal tax credits, both claimed on Form 8863.⁵ Federal law generally requires you to receive a 1098-T before claiming either credit, with limited exceptions for schools that were not required to issue one.⁶

American Opportunity Tax Credit

The AOTC offers up to $2,500 per eligible student each year: 100 percent of the first $2,000 in qualified expenses plus 25 percent of the next $2,000.⁶ Forty percent of the credit, up to $1,000, is refundable, so you can receive that amount as a refund even if you owe no federal tax.⁷

To qualify, the student must be enrolled at least half-time for at least one academic period during the tax year, must not have completed the first four years of postsecondary education before the tax year began, must not have claimed the AOTC (or the former Hope Credit) for more than four tax years total, and must not have a felony drug conviction at the end of the tax year.⁷

Lifetime Learning Credit

The LLC provides up to $2,000 per tax return, calculated as 20 percent of up to $10,000 in qualified expenses.⁶ The LLC is not refundable, so it can only reduce your tax to zero. It is more flexible than the AOTC: there is no limit on how many years you can claim it, no half-time enrollment requirement, and it covers undergraduate, graduate, and professional coursework.

Income Limits and Who Claims the Credit

Both credits share the same income ceiling. Your modified adjusted gross income must be below $90,000 (or $180,000 if married filing jointly) to receive the full credit. The credit phases out as income approaches those thresholds and disappears entirely at them.⁸ You cannot claim both credits for the same student in the same year, but you can claim the AOTC for one student and the LLC for another on the same return.

If a parent or someone else claims the student as a dependent, only that person can take the credit, even if the student paid the tuition. If the student is not claimed as a dependent, only the student can claim it.⁹

Qualified Expenses the Form Does Not Show

Box 1 captures only payments made directly to your school. Some expenses that qualify for a credit will not appear there, and the rules differ by credit.

For the AOTC, required books, supplies, and equipment count as qualified expenses even if you bought them from an off-campus bookstore or an online retailer. A required textbook purchased anywhere qualifies.¹⁰

For the LLC, course-related books, supplies, and equipment count only if your school required you to pay for them directly as a condition of enrollment. Purchases from third-party sellers do not qualify.¹⁰

Neither credit covers room and board, transportation, insurance, medical expenses, or personal living costs, even when those are billed through the school.

Coordinating With a 529 Plan

You can claim an education credit and take a tax-free 529 distribution in the same year, but you cannot apply the same dollars of tuition to both benefits.² This is often called the no-double-dipping rule.

To coordinate, start with your total qualified education expenses, subtract any tax-free scholarships or grants (Box 5), then subtract the expenses you use to calculate your education credit. The remainder is what you can cover with a tax-free 529 withdrawal. So with $8,300 in qualified expenses, $3,100 in scholarships, and an AOTC claim based on $4,000 in expenses, only $1,200 remains eligible for a tax-free 529 distribution.²

529 plans cover a broader range of expenses than the 1098-T shows. Room and board, computers, and internet access can be paid tax-free from a 529 even though those costs do not qualify for education credits.¹¹ Using 529 funds for those non-credit-eligible costs first is usually the simplest way to avoid overlap.

If the Form Is Wrong or Never Arrives

If the amounts on your 1098-T do not match your records, contact your school’s bursar or student accounts office. Payments made late in December, tuition waivers, and third-party payments often cause discrepancies. The school is responsible for filing a corrected form with the IRS and giving you an updated copy.

If your school closed or simply failed to issue a form, you can still claim the AOTC as long as you can show enrollment at an eligible institution and can document your payments for qualified tuition and related expenses. Keep receipts, bank statements, and enrollment verification records; the IRS may ask for them if it reviews your return.¹²

If a 1098-T arrives after you have already filed and the figures differ from what you reported, you may need to file an amended return on Form 1040-X to correct the credit.

Not the Same as Form 1098-E

The 1098-T and the 1098-E cover different stages of paying for education. The 1098-T reports tuition payments and scholarships while you are in school and supports education tax credits. Form 1098-E is a student loan interest statement sent by your loan servicer after you leave school, reporting interest payments of $600 or more during the year.³ The 1098-E supports the student loan interest deduction, which lets you deduct up to $2,500 in interest paid on qualified student loans whether or not you itemize.

1
Internal Revenue Service. Form 1098-T, Tuition Statement
2
Internal Revenue Service. Publication 970, Tax Benefits for Education
3
Internal Revenue Service. Instructions for Forms 1098-E and 1098-T
4
Office of the Law Revision Counsel. 26 USC 6050S – Returns Relating to Higher Education Tuition and Related Expenses
5
Internal Revenue Service. About Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
6
Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits
7
Internal Revenue Service. American Opportunity Tax Credit
8
Internal Revenue Service. Instructions for Form 8863
9
Internal Revenue Service. Instructions for Form 8863 – Education Credits
10
Internal Revenue Service. Qualified Education Expenses
11
Internal Revenue Service. 529 Plans – Questions and Answers
12
Internal Revenue Service. Education Credits – Questions and Answers