Form 1098-T, the Tuition Statement your school sends every January, has ten numbered boxes covering tuition payments, scholarships, prior-year corrections, and enrollment status. Only a few of them carry dollar figures, and those figures feed into education tax credits worth up to $2,500 per student. Here is what each box on the 1098-T reports and how to use it.
Who Sends the Form and When
Any college, university, or vocational school that participates in federal student aid programs must file a 1098-T for each enrolled student with a reportable transaction during the calendar year.1Internal Revenue Service. About Form 1098-T, Tuition Statement The school has to get the form to you by January 31 of the following year.2Internal Revenue Service. Instructions for Forms 1098-E and 1098-T
The school needs your correct Social Security Number or Taxpayer Identification Number for the form to process. If they don’t have it, you may not receive the form, and the IRS can impose a $50 penalty on you for failing to provide your TIN when requested.3eCFR. 26 CFR 301.6723-1 – Failure to Comply With Other Information Reporting Requirements If you recently changed your name or SSN, check with the registrar or bursar.
Box 1: Payments Received for Qualified Tuition and Related Expenses
Box 1 is the number most people came to see. It shows the total payments the school received during the calendar year for qualified tuition and required enrollment fees. Qualified means tuition and mandatory fees; it does not include room, board, health insurance, parking, or personal living costs. If you paid spring semester tuition in December, that payment lands on the 1098-T for the year you paid, not the year classes start.
Box 2: Amounts Billed (Now Blank)
Box 2 is empty on modern forms. Before 2018, schools could choose to report either amounts billed (Box 2) or amounts received (Box 1). Schools are now required to use Box 1, so Box 2 is effectively retired. If you see a figure there on an older form, it represents your qualified tuition costs under the old reporting method.
Box 3: Reporting Method Change
Box 3 was a checkbox that schools used to flag a change in reporting method during the transition away from Box 2. On current forms it sits unused.
Box 4: Adjustments to Prior-Year Payments
Box 4 reports reductions to qualified tuition amounts that appeared in Box 1 on a prior year’s form. This happens when you drop a class, get a late refund, or receive a billing correction after the prior year’s 1098-T was already issued. If you claimed an education credit last year based on the original Box 1 amount, a figure in Box 4 may mean you owe part of that credit back. The IRS calls this a recapture, and you handle it on your current year’s return.
Box 5: Scholarships and Grants
Box 5 shows the total scholarships and grants the school administered during the year, including institutional scholarships, Pell Grants, and other financial aid processed through the school. Loans do not count, since they are not free money.
Box 5 directly reduces the qualified expenses you can claim for an education tax credit. And if Box 5 is larger than Box 1, the excess may be taxable income. The IRS treats scholarship money used for anything other than tuition, fees, books, supplies, and required equipment as taxable. So a $15,000 scholarship covering $10,000 in tuition and $5,000 in room and board produces $5,000 of income you have to report.4Internal Revenue Service. Topic No. 421, Scholarships, Fellowship Grants, and Other Grants
Box 6: Adjustments to Prior-Year Scholarships
Box 6 is the scholarship mirror of Box 4. It reports adjustments to scholarships or grants that were reported in Box 5 on a prior year’s form. If a scholarship was reduced or returned after that year’s 1098-T was issued, Box 6 captures the change. A reduction in prior-year scholarship money could actually increase your eligible expenses for that year, though correcting it can be complicated and may require amending the prior return.
Box 7: Payments for an Academic Period Starting Next Year
A checkmark in Box 7 means some of the payments on this year’s form cover an academic period that begins in January through March of the following year.2Internal Revenue Service. Instructions for Forms 1098-E and 1098-T The common case: you pay spring tuition in December, and the school reports it on the current year’s form even though classes start in January.
Education credits follow when you paid, not when the semester begins. If Box 7 is checked, you can generally claim those expenses on the return for the year you actually made the payment. Just make sure you do not claim the same tuition dollars in two different tax years.
Box 8: At Least Half-Time Student
A checkmark in Box 8 means you were enrolled at least half-time during an academic period that began in the tax year. Half-time means at least half the full-time workload for your program under Department of Education standards. This box matters because the American Opportunity Tax Credit requires at least half-time enrollment.2Internal Revenue Service. Instructions for Forms 1098-E and 1098-T
Box 9: Graduate Student
A checkmark in Box 9 identifies you as a graduate student. Graduate students cannot claim the AOTC, which is only available for the first four years of undergraduate education, so a checked Box 9 points you toward the Lifetime Learning Credit instead.
Box 10: Insurance Contract Reimbursements
Box 10 is used by insurance companies, not schools. If an insurer reimbursed you for qualified tuition during the year, that amount appears here. For most students the box is blank.
Why the Numbers on Your 1098-T May Not Match What You Actually Paid
The dollar amounts on your 1098-T are not necessarily the figures you should put on your tax return. The form reports what the school received or processed, which does not always line up with what you personally paid out of pocket for qualified expenses.
A few reasons for the mismatch: the school may have applied a payment to a different reporting period, financial aid timing can shift amounts between calendar years, and some qualified expenses (like course-required books bought from a third-party retailer) never appear on the form. The IRS says you should rely on your own financial records, including receipts, bank statements, and student account histories, to determine the correct qualified expenses you paid.5Internal Revenue Service. Education Credits – Questions and Answers
Treat the 1098-T as a reference document rather than a binding receipt. If the number you claim differs from Box 1, keep documentation in case the IRS asks about it.
Using the 1098-T to Claim an Education Credit
The reason the boxes matter is that they feed into Form 8863, the form you attach to your federal return to claim an education credit.6Internal Revenue Service. Instructions for Form 8863 – Education Credits The basic calculation starts with your qualified expenses (Box 1 or your own records, whichever is more accurate) minus tax-free scholarships and grants (Box 5). That net figure runs through either the American Opportunity Tax Credit or the Lifetime Learning Credit. You can only claim one credit per student per year.
The AOTC is worth up to $2,500 per eligible student, calculated as 100 percent of the first $2,000 in net qualified expenses plus 25 percent of the next $2,000.7Office of the Law Revision Counsel. 26 USC 25A – American Opportunity and Lifetime Learning Credits It is partially refundable: if the credit zeroes out your tax, up to 40 percent (a $1,000 maximum) comes back as a refund.8Internal Revenue Service. American Opportunity Tax Credit The AOTC requires at least half-time enrollment (Box 8), applies only to the first four years of undergraduate education (so a checked Box 9 rules it out), and carries a four-year lifetime cap per student.
The Lifetime Learning Credit equals 20 percent of up to $10,000 in qualified expenses, for a maximum of $2,000 per return (not per student).9Internal Revenue Service. Lifetime Learning Credit It is nonrefundable but has no half-time requirement, no degree requirement, and no cap on the number of years.
Two boundaries worth naming before you file. If someone claims you as a dependent, they claim the credit, not you.10Internal Revenue Service. Education Credits – AOTC and LLC And if you paid tuition with a 529 plan distribution, you cannot use the same dollars for both the tax-free 529 withdrawal and the education credit.11Internal Revenue Service. 529 Plans – Questions and Answers The 1098-T will not sort either issue out for you.
Missing or Incorrect Forms
If January 31 has passed and you still do not have your 1098-T, contact the bursar’s office. Schools often post the form through the student portal before the paper copy arrives. If the form shows up with wrong figures, ask for a corrected version before you file.
You can still claim an education credit without a 1098-T as long as you can show enrollment at an eligible school and document the qualified expenses you paid.5Internal Revenue Service. Education Credits – Questions and Answers Bank statements, receipts, and your student account history all work as backup. Keep the documentation organized for at least three years after filing.