Tuition-paying students at eligible colleges or other post-secondary institutions should receive a copy of Internal Revenue Service Form 1098-T from their school each year. Eligible institutions include most colleges, universities, and vocational schools that are eligible to participate in the Department of Education’s student aid programs. This form provides information about educational expenses that may qualify the student—or the student's parents or guardian, if the student is a dependent—for education-related tax credits.
Who gets the 1098-T form?
Schools are required to send Form 1098-T to any student who paid "qualified educational expenses" in the preceding tax year. Qualified expenses include:
- tuition
- fees that are required for enrollment
- course materials required for a student to be enrolled
If someone else pays such expenses on behalf of the student (like a parent), the student still gets "credit" for them and receives the 1098-T. Schools are required to send the form to the student by January 31 and file a copy with the IRS by February 28.
Reporting qualified expenses
Education expense reporting and the Form 1098-T have been updated over the years 2017, 2018, and 2019.
2017 updates
In 2017, schools could report a student's qualified expenses one of two ways: based on how much the student actually paid during the year, or based on how much the school billed the student during the year.
- If the school reports the amount paid, it puts that figure in Box 1 of the form. If it reports the amount billed, it does so in Box 2.
- A school generally has to use the same reporting method every year. If it changes its method—which requires IRS approval—it puts a check mark in Box 3. This box is here primarily for the IRS's information, not the student's.
2018 updates
In 2018, the form was changed to reflect only amounts actually paid for qualified tuition and related expenses.
- Schools use Box 1 to report the payments received.
- Box 2 is no longer used.
- Box 3 still provided a check box to indicate a change in the method of reporting from the amount billed to the amount paid method.
2019 and beyond updates
After 2018 with only one method available for the current and prior years, the check box for changing methods is no longer needed, so Box 3 is no longer used.
TurboTax Tip:
Form 1098-T provides information about educational expenses that may qualify the student—or the student's parents or guardian, if the student is still a dependent—for education-related tax credits.
Adjustments and scholarships
Box 4 of the form shows any adjustments the school has made to qualified expenses reported on a previous year's 1098-T. If it turns out a previous year's expenses were lower than initially reported, the student may be responsible for additional tax for that year.
Box 5 shows the amount of scholarships and grants that were paid directly to the school for the student's expenses. Scholarships and grants may reduce the amount of qualified expenses the student can use when calculating a credit.
Box 6 shows any adjustments the school has made to scholarships and grants reported on a previous year's 1098-T. These adjustments may affect the student's tax liability for the previous year, so the student may have to file an amended return.
Other information
Schools check Box 7 if the amount in Box 1 or 2 includes expenses for an academic term that begins in the first three months of the year following the year covered by the 1098-T.
A check mark in Box 8 indicates that the student is enrolled at least half-time.
A check mark in Box 9 indicates that the student is enrolled in a graduate program.
Tuition insurance reimbursem*nts
Box 10 of the form comes into play only in cases in which students have had expenses reimbursed under a "tuition insurance" policy. Such policies reimburse students when they are forced to withdraw from school—for medical reasons or family emergencies, for example—after paying nonrefundable tuition.
- When an insurer reimburses a student's expenses, it provides that student with a copy of the 1098-T.
- Box 10 is used to show the amount reimbursed.
- The amount of expenses used to calculate credits generally are reduced by any reimbursem*nt reported here.
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FAQs
What should I do with my 1098-T? When you're ready to file your federal income tax return, make sure you have your Form 1098-T on hand — if you received one. It can help you calculate two potentially valuable education credits — the American opportunity tax credit and the lifetime learning credit.
How do I claim my 1098-T on my taxes? ›
Parents: If the student listed on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition. Students: If you're not being claimed as a dependent, enter the 1098-T on your return regardless of who paid the tuition, unless it was your employer.
How does a 1098-T affect my taxes? ›
The Form 1098-T is a form provided to you and the IRS by an eligible educational institution that reports, among other things, amounts paid for qualified tuition and related expenses. The form may be useful in calculating the amount of the allowable education tax credits.
Who files the 1098-T, parent or student? ›
Either you, your dependent, or both of you may enter Form 1098-T Tuition Statement and other education information in TaxAct®. If you claim a dependent, only you can claim the education credit. Therefore, you would enter Form 1098-T and the dependent's other education information in your return.
Do students get money back from 1098-T? ›
The American Opportunity Tax Credit can be worth up to $2,500 for each eligible student. And, because the credit is partially refundable (up to 40%), you (or your parents) could get a refund even if you don't owe any taxes. That's right, the government could send you a check to help with your education expenses.
Does filing a 1098-T increase the refund? ›
To answer simply, no, you do not get more benefits (refund) if you file Form 1098-T as income. In fact, the opposite may be true. Form 1098-T is used to report qualified tuition and related expenses paid by you or on your behalf to an eligible educational institution.
How much of 1098-T is deductible? ›
The amount that you are eligible to use to reduce your tax bill is, in most cases, simply the amounts paid for tuition and fees minus the amount of scholarships you received. You can only receive a deduction or credit for the amount of expenses that you paid out of pocket.
How do I get the full $2500 American Opportunity credit? ›
Be pursuing a degree or other recognized education credential. Have qualified education expenses at an eligible educational institution. Be enrolled at least half time for at least one academic period* beginning in the tax year. Not have finished the first four years of higher education at the beginning of the tax year.
Do college students get $1000 back on taxes? ›
You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
When should I stop claiming my college student as a dependent? ›
Generally, the IRS requires that the child is under the age of 19 (or under 24 if a full-time student), lives with you for more than half the year, and does not provide more than half of their own financial support.
Just paying your tuition is not enough. You must qualify as their dependent and they must claim you as a dependent for them to claim the tuition credit. If you do not qualify as their dependent (officially independent), you can claim the tuition credit (claim the 1098-T), even though your parents paid the tuition.
Should I claim my college student as a dependent? ›
Benefits of Claiming a College Student as a Dependent
In addition to tax credits, deductions like the student loan interest deduction may be available. Altogether, these tax benefits have the potential to save you thousands of dollars, which can in turn help pay for your child's education.
What happens if scholarships exceed tuition on 1098-T? ›
If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student's tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses.
What is the penalty for not filing 1098-T? ›
Failure to comply with this requirement may result in a $50 penalty, assessed by the IRS under Section 6723. If you need to apply for an ITIN please go to http://www.irs.gov/pub/irs-pdf/fw7.pdf to complete the application.
What if tuition and fees are not entered on 1098-T? ›
If there are qualified expenses not included on Form 1098-T, the preparer may include them on Form 8863 and also include a preparer note in the return notating the additional expenses. The taxpayer will need to provide the preparer with copies of receipts or other proof of the expenses.
Is college tuition tax deductible? ›
What is considered a qualified education expense? Although key education expenses like tuition and fees are no longer tax deductible, you might be able to claim a credit by using the American Opportunity Credit or the Lifetime Learning Credit.
