What Is a 1098-T Form?

A 1098-T form does not get you more money by itself. It is a Tuition Statement, a record your college sends you and the IRS each year showing tuition paid and scholarships received. The form itself pays nothing. It supports a claim for education tax credits, mainly the American Opportunity Tax Credit and the Lifetime Learning Credit, which can lower your tax bill or increase your refund.

That matters, because many students see a large number in Box 1 and assume a refund of that size is coming. It is not. The numbers are the starting point for a calculation, not a payment. This guide explains the form in plain English, what each box means, how the two main credits work, and what the form could be worth to you, with a worked example using real figures, checked against official IRS sources today.

What the 1098-T Is and Who Gets One

Form 1098-T, Tuition Statement, comes from eligible educational institutions, mostly accredited colleges and universities in the United States. If you were enrolled for credit and the school had a reportable transaction for you, it must furnish the form by January 31 after the tax year. Many schools post it in the student portal, so check there first.

The form goes to the student, and a copy goes to the IRS. It reports facts; it pays nothing and proves nothing by itself. Parents usually use it when they claim the student as a dependent, since that person generally claims the credit too. Independent students use it on their own return.

Not every student gets one. Schools need not furnish a form for a nonresident alien who has not asked for one, when tuition was entirely waived or paid with scholarships, or when the courses carry no credit toward a degree. If you did not get a form and think you should have, ask the bursar or student accounts office. You can still claim a credit in some cases with no form, but you will need your own records of what you paid.

What Each Box Means

Box 1 shows payments received for qualified tuition and expenses. Most schools report in Box 1, and it is the figure you will use most.

Box 2 shows amounts billed for qualified tuition and expenses. Some schools report here instead of Box 1. A bill is not a payment, and the credit is based on amounts actually paid.

Boxes 4 and 6 show adjustments for a prior year, to tuition and to scholarships. Both reduce the amounts you can count, so check them before you use Box 1.

Box 5 shows scholarships or grants processed for you during the year, including federal, state, and private aid. Expenses paid with tax-free scholarships cannot also be used for a credit, so subtract Box 5 from your qualified expenses first.

Box 7 is a checkbox. If checked, Box 1 includes charges for a period that begins next year, for example spring tuition billed in December. Those amounts do not count this year.

Box 8, if checked, means you were at least half-time, which matters for the AOTC. Box 9 marks graduate students, and the AOTC covers only the first four years of undergraduate study.

Does the 1098-T Get You More Money?

The form itself gives you nothing, but the credits it supports can. The money comes from the tax credit you claim on Form 8863, Education Credits. Think of the form as a receipt that proves your expenses, and the credit as the actual benefit.

The benefit depends on which credit you can claim, how much you paid in qualified expenses after scholarships, and how much tax you owe. A credit cuts your tax bill dollar for dollar, which is far stronger than a deduction. The AOTC is partly refundable, so part of it can come back even if you owe no tax. The LLC is not refundable, so it can only reduce your tax to zero. Box 1 can mislead: $8,000 with $5,000 in scholarships leaves only $3,000 of qualified expenses.

The American Opportunity Tax Credit

The American Opportunity Tax Credit, or AOTC, is the more valuable credit for most undergraduates: up to $2,500 per eligible student per year, from 100 percent of the first $2,000 in qualified expenses plus 25 percent of the next $2,000. You need at least $4,000 in qualified expenses for the full amount.

Up to 40 percent, maximum $1,000, is refundable, so it can come back even if you owe no federal income tax. The other 60 percent is nonrefundable and can only reduce your tax bill to zero. If you owe no tax, only up to $1,000 can reach you.

The AOTC is only for the first four years of postsecondary education, for a student pursuing a degree or other recognised credential and enrolled at least half-time for at least one academic period. The student must not have finished four years of study, and must not have claimed the AOTC, or the older Hope Credit, for more than four tax years. A felony drug conviction can also disqualify the student.

Income limits apply too. For 2025, the full credit is available at modified adjusted gross income of $80,000 or less single, or $160,000 or less joint. It phases out between $80,000 and $90,000 single, and $160,000 and $180,000 joint, and above those top figures no AOTC can be claimed. To claim it, file Form 8863 with your Form 1040 and include the school employer identification number. Both you and the student need a Social Security number or Individual Taxpayer Identification Number issued before the return due date.

The Lifetime Learning Credit

The Lifetime Learning Credit, or LLC, is broader but smaller: up to $2,000 per tax return, not per student, from 20 percent of the first $10,000 in qualified tuition and fees. There is no limit on years, and it covers undergraduate, graduate, and professional courses, and even courses to acquire or improve job skills.

The LLC is not refundable. It can cut your tax bill to zero but cannot create a refund. It uses the same income limits as the AOTC: $80,000 to $90,000 single, $160,000 to $180,000 joint.

You cannot claim both credits for the same student in the same year. If you are eligible for both, choose one. For most undergraduates in their first four years the AOTC is worth more. You also cannot claim either credit if you file as married filing separately. The IRS Tax Benefits for Education Information Center explains both credits, and Publication 970 gives the full rules with examples.

A Worked Example With Real Math

Meet Sara, a second year undergraduate. Her 1098-T shows Box 1 payments of $6,000 and Box 5 scholarships of $1,500, and Box 8 is checked, so she was at least half-time. She is pursuing a degree, has claimed the AOTC once, and is within the four year limit. Her parent claims her as a dependent, with income of $65,000, below the $80,000 single filer limit.

Step one: take Box 1, $6,000, and subtract Box 5, $1,500. The result is $4,500 in qualified expenses, and that is the figure the credit is calculated on.

Step two is to calculate the AOTC: 100 percent of the first $2,000 is $2,000, and 25 percent of the next $2,000 is $500, which adds to $2,500. Sara has $4,500 in qualified expenses, more than the $4,000 needed, so she gets the maximum.

Step three is to split the credit: 40 percent of $2,500 is $1,000 refundable, and 60 percent is $1,500 nonrefundable.

Step four is to see what the credit is worth. Suppose the parent tax bill before credits is $800. The nonrefundable $1,500 can only cut that bill to zero, so $800 is used and $700 is wasted, while the refundable $1,000 is paid back. The total benefit is $1,800: $800 of tax wiped out plus $1,000 refunded. Sara does not get $2,500 in cash, and she does not get $6,000 back. The form showed $6,000 paid, but the real benefit is $1,800.

How to Claim the Credit

Step 1. Get your 1098-T; check Boxes 1, 5, 7, 8, and 9. Amounts for a future period do not count this year.

Step 2. Gather your own records. The 1098-T does not capture every qualified expense. Required books, supplies, and equipment can count for the AOTC even if they do not appear on the form. Keep receipts for tuition, fees, books, and required materials, plus records of scholarships and grants. The credit is based on amounts actually paid, not amounts billed.

Step 3. Check that you meet the rules: first four years for the AOTC, enrolled at least half-time, pursuing a degree, within the income limits, and no four prior AOTC claims for this student.

Step 4. File Form 8863 with your Form 1040, enter the qualified expenses, and include the school employer identification number, which the AOTC requires. IRS instructions for Form 1098-T are at irs.gov/forms-pubs/about-form-1098-t, and the credits overview is at irs.gov/newsroom/tax-benefits-for-education-information-center.

Enter the boxes exactly as shown in your tax software, then check the result against your own records.

What the 1098-T Does Not Show

The form is a starting point, not the final word, and it leaves out several things that matter.

First, it does not show all qualified expenses. Required books, supplies, and equipment count for the AOTC even when the school did not sell them, so they never appear on the form. Room and board, transport, insurance, and living costs are not qualified expenses for either credit.

Second, the form reports what the school received or billed, not always what you paid and when. Spring tuition billed in December but paid in January counts in the year you paid it, so leave Box 7 amounts for next year out of this year calculation.

Third, the form does not tell you whether you are eligible. It does not know your income, how many years you have claimed the AOTC, whether you are at least half-time, or whether someone else claims you. Those answers come from your situation, not the form.

Fourth, loans are not scholarships, so a student loan does not reduce qualified expenses, and work study pay is wages, not a scholarship.

What to Do If You Did Not Get a Form or It Is Wrong

If January has passed and no 1098-T has arrived, check your student portal, then contact the bursar’s office. Ask whether a form was issued and whether one was required for you.

If the figures look wrong, ask the school to correct them. Common errors are a Box 1 figure that includes next year tuition, a Box 5 figure that misses a scholarship, or a blank Box 8 for a half-time student. Do not file with a wrong form. Use your own payment records and bank statements to work out the true figures, and keep them with your return.

If the school was not required to issue a form, you may still claim a credit, but you must prove the expenses yourself. Follow the Form 8863 instructions and Publication 970, check the Federal Student Aid tax FAQ, or ask a qualified tax professional for help.

Budgeting for College Costs

Education credits help, but they cover only part of the cost, and they arrive after you have paid. A $2,500 credit does not pay a $6,000 tuition bill. Plan before the term starts, not when the 1098-T arrives in January.

List the full cost first: tuition, fees, books, housing, food, and transport, plus a small buffer. Then list the aid: grants, scholarships, and any family contribution. The gap is what you must cover from savings, work, or loans. Our guide on how to create a monthly budget shows how to build that plan month by month.

If you are still choosing a college, check the aid deadlines early. Our guide to the FAFSA due date explains when to file, and our guides on Pell Grant eligibility by income and what a high SAI on the FAFSA means explain how aid is worked out. Grants and scholarships reduce what you pay and the expenses you can use for a credit.

Frequently Asked Questions

Does the 1098-T form get me more money?

Not by itself. The form reports tuition paid and scholarships received. The money comes from the credit claimed on Form 8863, mainly the AOTC of up to $2,500 per student, with up to $1,000 refundable.

What is the difference between Box 1 and Box 5?

Box 1 shows payments the school received for qualified tuition and expenses. Box 5 shows scholarships or grants processed for you. Subtract Box 5 before you calculate a credit, because expenses paid with tax-free scholarships cannot be counted twice.

Can I claim the AOTC if I did not receive a 1098-T?

Sometimes. The IRS generally requires a 1098-T before you claim the AOTC or the Lifetime Learning Credit, but there are exceptions when the school was not required to issue one. Then you need your own payment records and must follow the Form 8863 instructions.

How long can I claim the American Opportunity Tax Credit?

For four tax years per student, and only for the first four years of postsecondary education. Once claimed four times, or the student has finished four years of study, the AOTC is no longer available, though the Lifetime Learning Credit may still be.

Can my parents and I both claim the same 1098-T?

No. Only one taxpayer can claim the credit for a student in a year, usually the person who claims the student as a dependent. If your parent claims you, your parent claims the credit. If you are independent, you claim it.

Conclusion

A 1098-T is a Tuition Statement, not a payment. It tells you and the IRS what you paid for tuition and what scholarships you received, and it helps you claim an education tax credit. The AOTC is worth up to $2,500 per eligible student per year, up to $1,000 refundable, and the LLC is worth up to $2,000 per return. Your real benefit depends on qualified expenses after scholarships, your tax bill, your income, and years already claimed. Check your boxes, keep your receipts, file Form 8863, and treat the form as evidence, not money in the bank.

This article is for general information and education only. It is not legal or financial advice.