Paying for college can be expensive, but certain tax breaks can help reduce the burden. If you’re in college, the 1098-T is a critical tool for claiming those tax breaks. The 1098-T, Tuition Statement, is a form colleges and universities send to students every year. It shows how much you paid in tuition and other education expenses for the tax year.
The form can be confusing, since the numbers listed may differ from the total you paid to your school. Learning what the form includes (and what it doesn’t) can help you avoid mistakes and maximize your tax savings.
Key Takeaways
- IRS Form 1098-T shows how much you paid in tuition or qualifying education expenses for the year.
- The form is necessary to qualify for credits like the Lifetime Learning Credit (LLC) or American Opportunity Tax Credit (AOTC).
- The 1098-T may not include all education expenses, such as room and board.
What Is the 1098-T?
Form 1098-T is a tax document that schools issue to students to report how much they paid in tuition and other expenses.
In general, schools must send out the form to students by January 31, and they must also send a copy to the Internal Revenue Service (IRS).
Why Is the 1098-T Important?
The primary purpose of the form is to help taxpayers determine their eligible education costs for tax credits. Education tax credits can reduce your tax bill or even increase how much cash you get in your tax refund.
For college students, the two most common tax credits are the AOTC and LLC:
- AOTC: The AOTC is a tax credit for the first four years of higher education. The maximum credit is $2,500 per year, and it’s a refundable credit. If the credit brings your tax bill to zero, you can have up to 40% of the remaining credit refunded to you (up to a maximum of $1,000).
- LLC: The LLC is a tax credit without a limit on how many years you can claim it, so it’s particularly helpful for graduate students. You can qualify for a credit up to $1,000 for eligible expenses, but the credit is not refundable.
| AOTC | LLC | |
| Maximum Credit Amount | $2,500 | $2,000 |
| Maximum Duration | First 4 years of higher education | No maximum |
| Refundable | Yes | No |
When you file your tax return, you’ll enter the details from the 1098-T tax form on Form 8863 (Education Credits) to claim potential tax credits.
[Important: If you made payments toward your student loans, you may be eligible for the student loan interest tax deduction.]
How to Read Your 1098-T: A Box-by-Box Guide
If you receive a 1098-T form, here’s what the key components mean:
- Box 1-Payments received for qualified tuition and related expenses: The number in this box is the total you paid to your college or university for your tuition, required course fees, lab fees, and student activity fees. This box doesn’t include any money you paid for housing, meal plans, student health insurance, or transportation.
- Box 2 and 3: Both of these boxes are left blank.
- Box 4-Adjustments made for a prior year: This box reports any adjustments to the qualifying tuition or fees you paid for the prior year. For example, if you dropped a course, you may have overpaid tuition during the previous year, and this box shows the amount that was refunded to you.
- Box 5-Scholarships and grants: Box 5 reports all scholarships, grants, or fellowship funds you received during the calendar year. This box will include institutional, government, or third-party financial aid awards.
- Box 6- Adjustments to scholarships or grants for a prior year: This box reports any changes to your scholarship or grant amounts from the previous year, such as a reduced grant amount due to a change in enrollment status.
Why Your 1098-T May Not Match Your Total Cost of Attendance
How much you paid to your school for the academic year may not match the numbers on the 1098-T. There are several reasons for the discrepancy:
- The form only includes qualified education expenses: The 1098-T numbers only include money you paid for qualified expenses, such as tuition and lab fees. Other expenses that make up the total cost of attendance, such as room and board, school health insurance, or transportation, are not included.
- The form focuses on the tax year, not the academic year: With most school-related expenses, you pay per semester or per academic year. However, the 1098-T reports how much you paid during the calendar year for tax purposes. For example, if you enrolled as a first-year student in the fall of 2025, your 1098-T will only show what you paid for the fall semester; it won’t include any money you’ve already paid for the 2026 spring academic period.
- The form doesn’t take into account third-party expenses: If you purchase education-related items elsewhere, such as textbooks you bought online, those purchases are not included on the 1098-T.
College and Taxes
Understanding the 1098-T form can make tax season less confusing for students and families, making it easier to qualify for valuable tax benefits like the AOTC or LLC. The 1098-T captures how much you paid in tuition and fees so you can take advantage of tax credits.
If you’re overwhelmed by the connection between college and taxes, set up an appointment with a tax professional to get personalized tax advice. You can find credentialed tax preparers at IRS.gov.
FAQs
Who qualifies for a 1098-T form?
Most students enrolled in a program at an eligible educational institution who paid tuition or other fees will receive a 1098-T form. The only students who wouldn’t receive a form are those who are taking classes without credit.
Do you get money back from a 1098-T?
Receiving Form 1098-T doesn’t guarantee that you’ll qualify for a tax credit. You simply use the information on it to claim a credit.
How does a 1098-T affect my taxes?
The 1098-T form helps you determine whether you qualify for tax credits and how much of your tuition and other expenses count toward those credits.
