Form 1098-T: Tuition Statement for Education Credits

IRS Form 1098-T, titled "Tuition Statement," is an information return that reports amounts paid or billed for qualified tuition and related expenses. Educational institutions file this form with the IRS and provide a copy to students who can use it to claim education tax benefits.

The form includes key boxes:

• Box 1: Payments received for qualified tuition and related expenses
• Box 4: Adjustments made for a prior year
• Box 5: Scholarships or grants
• Box 6: Adjustments to scholarships or grants for a prior year
• Box 7: Box 1 includes amounts for an academic period beginning January-March of the next year
• Box 8: Check if at least half-time student
• Box 9: Check if graduate student

Eligible educational institutions must file Form 1098-T for each student who:

• Is enrolled for at least one academic period during the calendar year
• Is enrolled in a course for which credit is offered (audit-only courses do not count)
• Made payments for qualified tuition and related expenses, or received scholarships or grants

Eligible educational institutions include:

• Colleges and universities
• Vocational schools
• Other postsecondary institutions eligible to participate in federal student aid programs

Exception: Institutions do not need to file for students whose qualified expenses are entirely covered by scholarships or grants, or for nonresident alien students (unless requested).

Qualified expenses include:

• Tuition
• Fees required for enrollment or attendance
• Course materials required by the institution (as of 2016)

Qualified expenses do NOT include:

• Room and board
• Insurance
• Medical expenses
• Transportation
• Personal expenses
• Equipment or supplies not required by the institution

Note that the definition of qualified expenses differs slightly for education credits versus Form 1098-T reporting. Students should consult IRS Publication 970 when calculating their credit.

The American Opportunity Credit (AOC) provides up to $2,500 per eligible student for the first four years of higher education. Up to 40% of the credit ($1,000) is refundable, meaning you can receive it even if you owe no tax.

Requirements for the AOC:

• Student is pursuing an undergraduate degree or other recognized credential
• Student is enrolled at least half-time for at least one academic period
• Student has not completed the first four years of postsecondary education
• Student has not claimed the AOC or Hope Credit for more than four tax years
• Student has no felony drug conviction

Income limits (phase-out ranges):

• Single: MAGI $80,000 - $90,000
• Married filing jointly: MAGI $160,000 - $180,000

The Lifetime Learning Credit (LLC) provides up to $2,000 per tax return for qualified education expenses. Unlike the AOC, this credit is available for any number of years and for courses to acquire or improve job skills.

Key differences from the AOC:

• No limit on the number of years you can claim it
• Available for undergraduate, graduate, and professional degree courses
• Available for courses to acquire or improve job skills
• No half-time enrollment requirement
• Not refundable (limited to your tax liability)
• Credit is per tax return, not per student

Income limits (phase-out ranges):

• Single: MAGI $80,000 - $90,000
• Married filing jointly: MAGI $160,000 - $180,000

Scholarships, grants, and other tax-free educational assistance reduce the amount of qualified expenses you can use to calculate your credit.

Example: If you paid $10,000 in tuition but received $6,000 in scholarships (Box 5), your net qualified expenses are $4,000 for credit calculation purposes.

Tax-free educational assistance includes:

• Pell Grants and other federal grants
• State grants
• Institutional scholarships and grants
• Tax-free employer educational assistance
• Veterans' educational assistance

In some cases, students may benefit from treating part of a scholarship as taxable income to preserve more qualified expenses for the education credit. Consult a tax professional for complex situations.

Educational institutions must meet the following deadlines for Form 1098-T:

For specific dates including weekend adjustments, see our Form 1098-T Filing Deadlines.

Why do the amounts on my 1098-T not match what I paid?

Form 1098-T reports amounts billed during the calendar year, which may include spring semester billed in December. Box 7 indicates if amounts for the next year's spring semester are included. Your actual qualified expenses for credit purposes may differ.

Can I claim a credit if Box 1 shows zero?

Possibly. If your scholarships exceeded billed amounts but you still paid out-of-pocket for books or other qualified expenses, you may have qualified expenses for credit purposes. Keep your receipts as documentation.

What if I did not receive a Form 1098-T?

You can still claim an education credit if you meet the requirements and have documentation of your qualified expenses. Schools are not required to report for certain students (like nonresident aliens or those with fully covered expenses).

Can a parent claim the credit for their dependent?

Yes. If the parent claims the student as a dependent, the parent claims the education credit. Only one taxpayer can claim the credit for the same student's expenses.