What Is a 1098-T Form? Credits, Scholarships, and Missing Forms

A 1098-T form is the tuition statement your college or other postsecondary school sends you each January to report what you paid in qualified tuition and related expenses during the prior calendar year. You use the numbers on it to claim one of two federal education tax credits worth up to $2,500 per student. Your school sends a copy to the IRS at the same time, so what you report on your return needs to match the form or be backed up by your own records.¹

Federal law requires the school to get the form to you by January 31. Students taking courses for no academic credit and students whose qualified expenses were entirely covered by scholarships or grants don’t receive one.²

What the Numbers on the Form Mean

Most boxes on the 1098-T don’t change your tax bill. A few do.

Box 1 shows the total payments your school received for qualified tuition and related expenses during the year. It counts out-of-pocket payments, student loan proceeds, and payments from third parties like a grandparent. This is the starting point for your credit.²

Box 5 shows scholarships, fellowships, and grants your school processed during the year. Subtract Box 5 from Box 1 to get your net cost.

Box 8 is checked if you were enrolled at least half-time for any academic period during the year. Half-time enrollment is a requirement for the American Opportunity Tax Credit.

Box 9 is checked if you were in a graduate program. Graduate students can’t claim the AOTC but can claim the Lifetime Learning Credit.

Box 7 gets checked when payments reported for the current year apply to a semester starting in January, February, or March of the next year. You can still claim those expenses in the year you paid them.

What the Form Leaves Out

The 1098-T only reports money that ran through the school. For the American Opportunity Tax Credit, you can also count books, supplies, and course-related equipment even when you bought them from a bookstore or online retailer.³ A student whose 1098-T shows $3,000 in net tuition but who spent another $1,000 on textbooks and a required laptop can claim up to $4,000 in qualified expenses for the AOTC. The IRS won’t see those purchases on the form, so keep the receipts.

The Lifetime Learning Credit is stricter. Course materials generally count only if you paid them to the school as a condition of enrollment.

Some costs never qualify for either credit no matter how essential: room and board, transportation, student health fees, and insurance.⁴ Sports, games, and hobby courses don’t qualify unless the course is part of a degree program (for the AOTC) or helps you acquire or improve job skills (for the LLC).

Which Credit the 1098-T Feeds

You claim the credit on Form 8863 and attach it to Form 1040.⁵ Only one credit per student per year, so pick the one worth more.

American Opportunity Tax Credit

Up to $2,500 per eligible student. The math is 100% of the first $2,000 in qualified expenses plus 25% of the next $2,000, which is why $4,000 in expenses maxes it out.⁶ Up to 40% (as much as $1,000) is refundable, meaning you can get it back even if you owe no tax. The AOTC is limited to the first four years of higher education, requires the student to be pursuing a degree or recognized credential, requires at least half-time enrollment for at least one academic period, and is unavailable to anyone with a federal or state felony drug conviction.

Lifetime Learning Credit

Up to $2,000 per tax return, calculated as 20% of the first $10,000 in qualified expenses.⁷ It is nonrefundable, has no year limit, no half-time requirement, and covers graduate school and single job-skill courses. If you’re past your fourth year of college or picking up a professional credential, this is generally the only option.

Who Actually Claims It

If someone claims you as a dependent, only that person can take the education credit for your expenses. You can’t claim it yourself.⁵ The reverse applies too. If a parent could claim a student as a dependent but chooses not to, only the student can claim the credit; the parent can’t take a credit for a student they didn’t actually claim.⁸ Run the numbers both ways. A parent’s higher marginal rate often makes claiming the student and the credit on the parent’s return the better result, but not always.

Both credits phase out between $80,000 and $90,000 of modified adjusted gross income for single filers, and between $160,000 and $180,000 for married filing jointly. Above the ceiling the credit is gone.⁹

Two rules trip people up. Married filing separately disqualifies you from either credit entirely.⁵ And starting in 2026, everyone on the claim (both the person claiming the credit and the student) must have a Social Security Number valid for work, issued before the return’s due date. An ITIN will no longer qualify.⁸

Coordinating with Scholarships and 529 Plans

You can’t use the same dollar of tuition to both take a tax-free 529 withdrawal and claim an education credit. The IRS requires you to subtract tax-free educational assistance from your qualified expenses before computing the credit.¹⁰ Scholarships, Pell Grants, employer tuition assistance, veterans’ benefits, and the tax-free portion of 529 distributions all reduce the expense pool.

A common approach: use 529 money for room, board, and other non-credit-eligible costs, and use out-of-pocket tuition payments to fund the credit. The point is to keep expenses from overlapping between benefits.

Watch the other direction too. If Box 5 exceeds your qualified expenses, the excess is generally taxable income to the student. Scholarship dollars spent on room, board, or travel lose their tax-free status.¹¹ Nothing on the 1098-T flags the taxable portion. You have to work it out.

If Your 1098-T Is Missing or Wrong

If January passes without a form, check your school’s student portal. Most schools post it online before mailing paper copies. If it’s truly missing, contact the registrar or bursar. Not having the form doesn’t take away your right to claim the credit as long as you have your own payment records.³

Wrong name, wrong Social Security Number, or a payment amount that doesn’t match your records has to be fixed by the school. Ask for a corrected 1098-T rather than overriding the numbers yourself.²

Even a correct 1098-T is a starting point, not the last word. Box 1 usually understates your eligible expenses because it doesn’t include books and supplies bought outside the school. It sometimes overstates them, too, when a health fee or other non-qualifying charge gets bundled into tuition. Your bank statements, credit card receipts, and bookstore invoices are what actually support the credit if the IRS asks.

1
Internal Revenue Service. About Form 1098-T, Tuition Statement
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Internal Revenue Service. Instructions for Forms 1098-E and 1098-T (2025)
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Internal Revenue Service. Education Credits – Questions and Answers
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Internal Revenue Service. Qualified Education Expenses
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Internal Revenue Service. Education Credits – American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC)
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Internal Revenue Service. American Opportunity Tax Credit
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Internal Revenue Service. Lifetime Learning Credit
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Internal Revenue Service. Publication 970 (2025) – Tax Benefits for Education
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Internal Revenue Service. Instructions for Form 8863 (2025)
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Internal Revenue Service. No Double Education Benefits Allowed
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Internal Revenue Service. Topic No. 421 – Scholarships, Fellowship Grants, and Other Grants