The figures from your 1098-T don’t go on Form 1040 directly. They flow through Form 8863, which calculates your education credit, and the result lands in two places on the 1040: Line 29 for the refundable portion of the American Opportunity Tax Credit, and Schedule 3, Line 3 for the nonrefundable portion of either education credit. If your scholarships in Box 5 exceed your qualified tuition in Box 1, the taxable excess is reported separately, usually on Schedule 1, Line 8r.
So the short answer to where to put 1098-T on your 1040 is: nowhere, at least not the form itself. It’s a supporting document that feeds Form 8863, and Form 8863 is what talks to your 1040.
Why the 1098-T Routes Through Form 8863
Form 8863 is where the credit is actually built. You cannot claim either education credit without it. The form takes the tuition figure in Box 1 of your 1098-T, subtracts scholarships and grants from Box 5, and adds any qualifying books, supplies, and required equipment that weren’t billed by the school. That adjusted qualified expense number is what generates the credit.
A few practical points affect what you actually enter. The amount in Box 1 may not match what you paid for the tax year, because schools sometimes bill in December for a spring term or otherwise report on a cycle that doesn’t line up with the calendar year. Reconcile against your own payment records rather than copying Box 1 without checking. You’ll also need the school’s federal employer identification number from the 1098-T; Form 8863 asks for it.
Once Form 8863 is filled out, it produces two credit amounts that split between Part I (refundable) and Part II (nonrefundable). Those two amounts are what move to your 1040.
Form 1040, Line 29: The Refundable AOTC Portion
Up to 40% of the American Opportunity Tax Credit is refundable, capped at $1,000 per eligible student. Form 8863 calculates this figure in Part I, and it transfers to Form 1040, Line 29.
Because it’s refundable, this amount can generate a refund even if you owe no tax. It’s the only piece of an education credit that behaves this way, and it applies only to the AOTC. The Lifetime Learning Credit has no refundable portion, so Line 29 stays blank if that’s the credit you’re claiming.
Schedule 3, Line 3: The Nonrefundable Portion
The rest of the credit, whether it’s the nonrefundable 60% of the AOTC or the entire Lifetime Learning Credit, goes on Schedule 3, Line 3, labeled “Education credits from Form 8863, line 19.”
Schedule 3 totals your nonrefundable credits, and that total then flows to Form 1040, Line 20. This portion reduces your tax liability but cannot push it below zero. If your tax bill is already zero, the nonrefundable portion produces no benefit.
Schedule 1, Line 8r: Taxable Scholarship Excess
When Box 5 (scholarships and grants) exceeds Box 1 (qualified tuition and fees), the difference is generally taxable to the extent it was used for costs like room and board or other non-qualifying expenses. That taxable amount doesn’t go on Form 8863. It’s income, and it belongs on your 1040 through one of two paths:
- If the taxable portion was reported to you on a W-2 (common with teaching or research assistantships where the aid was compensation for services), include it in wages on Form 1040, Line 1a.
- If it wasn’t on a W-2, report it on Schedule 1, Line 8r. Schedule 1’s total then flows to Form 1040, Line 8.
Older instructions used to direct paper filers to write “SCH” next to Line 1. The current 1040 handles unreported scholarship income through Schedule 1, Line 8r instead. Missing this reporting can trigger the accuracy-related penalty of 20% on the resulting underpayment, so if you have excess scholarship money and no W-2 for it, don’t skip the Schedule 1 entry.
Attaching Form 8863 to Your Return
Form 8863 has to be attached to your 1040. Tax software does this automatically. If you file on paper and forget to include it, the IRS will likely disallow the credit and send you a notice, even though the numbers on your 1040 look correct on their own. The 1040 lines only show the result; Form 8863 shows the work.
Who Actually Puts the 1098-T on Their Return
One boundary worth flagging before you start entering numbers: if the student is claimed as a dependent on someone else’s return, only that taxpayer can use the 1098-T to claim the education credit. The student cannot claim it on their own return, even if the student paid the tuition out of their own account or with loans in their own name.
Qualified expenses paid by a third party on behalf of the student are treated as paid by whoever claims the dependent. A tuition check from a grandparent, written directly to the school, still counts for the parent claiming the student. If the student isn’t claimed as a dependent and files independently, then the student is the one who puts the 1098-T information on Form 8863 and carries the credit to their own 1040. The credit isn’t split across two returns either way.
Don’t Double-Count Expenses You Already Covered Tax-Free
Before you plug Box 1 into Form 8863, subtract any qualified expenses that were paid with tax-free money. This includes 529 plan distributions, Pell Grants, employer-provided educational assistance, and veterans’ education benefits. You cannot claim an education credit on the same dollar of tuition that a tax-free source already covered.
The usual approach is to allocate enough qualified expenses to the credit first, up to $4,000 for a full AOTC, and then apply 529 funds to remaining costs like room and board, which 529 plans can cover tax-free for students enrolled at least half-time. There is one deliberate exception: you can choose to include an otherwise tax-free scholarship in your income, making it taxable, which then frees up those expenses to count toward the credit. That trade-off sometimes produces a net benefit when the credit is worth more than the tax on the added scholarship income. If you take that route, the added scholarship income lands on Schedule 1, Line 8r in the same way described above.