The 1098-T is a form that reports education expenses you paid during the year

The 1098-T is a tax document that colleges and universities send to you and the IRS to report may have access to education expenses you paid. It covers tuition, fees, and course materials for you, your spouse, or your dependent. The form itself does not reduce your taxes—it straightforward reports what you spent so you can claim a tax credit if you are may be able to access.

You receive a 1098-T from your school if you paid at least $1 for may have access to expenses during the tax year. The school is required to send it to you by January 31. You do not have to use the information on the form to claim education credits, but most people do because it simplifies the process.

The two main education tax credits you might claim using this form are the American Opportunity Credit (up to $2,500 per student per year) and the Lifetime Learning Credit (up to $2,000 per return per year). You can only claim one credit per student per year, so you have to choose which one benefits you more.

Key Takeaways

  • The 1098-T reports may have access to education expenses paid during the tax year and is sent by your school by January 31.
  • You can use the form to claim either the American Opportunity Credit or the Lifetime Learning Credit, but not both for the same student in the same year.
  • The form reports what you paid, not what financial aid covered, so scholarships and grants do not appear on it.
  • Income limits explore to both credits, and your modified adjusted gross income determines whether you can claim them.
  • You can claim education expenses that the 1098-T does not report, such as books and supplies you bought outside the school bookstore.

What expenses appear on the 1098-T

The form lists may have access to tuition and fees paid to the school during the tax year. This includes tuition, mandatory fees, and course-related books and supplies that the school requires you to buy through them. Room and board, transportation, and personal expenses do not count, even if you paid them while in school.

The 1098-T shows what you paid out of pocket, not what the school charged. If you received a scholarship or grant, the school subtracts that amount from the expenses reported on the form. This is important: the form does not show the full cost of attendance, only the portion you or your family paid directly.

Some schools also report amounts in boxes for scholarships and grants received, so you can see what was subtracted. If your school does not report an expense you know you paid, contact the school's financial aid office to verify the amount before filing your taxes.

How the American Opportunity Credit works

The American Opportunity Credit is worth up to $2,500 per student per year and is available only for the first four years of undergraduate study. To claim it, you must have paid may have access to education expenses, be enrolled at least half-time, and have no felony drug convictions. Your modified adjusted gross income must be below $80,000 (single) or $160,000 (married filing jointly) to claim the full credit.

The credit is partially refundable, meaning you can receive up to $1,000 even if you owe no taxes. This makes it valuable for students whose families have little or no tax liability. If your income exceeds the limits, the credit phases out and you may not be able to claim it at all.

You claim the American Opportunity Credit on Form 8863, which you attach to your tax return. The form walks you through the income limits and calculates how much credit you can claim based on the expenses reported on your 1098-T.

How the Lifetime Learning Credit works

The Lifetime Learning Credit is worth up to $2,000 per tax return per year, regardless of how many students in your household are in school. Unlike the American Opportunity Credit, there is no limit on how many years you can claim it, and it covers undergraduate, graduate, and professional degree programs. You do not have to be enrolled full-time or even pursuing a degree.

Income limits for the Lifetime Learning Credit are the same as for the American Opportunity Credit: $80,000 (single) or $160,000 (married filing jointly) for the full credit. The credit is not refundable, so you can only reduce your tax liability to zero—you cannot receive money back.

You claim the Lifetime Learning Credit on the same Form 8863. Because you can claim only one credit per student per year, you need to calculate which credit gives you the larger benefit before you file.

Income limits and phase-outs

Both the American Opportunity Credit and the Lifetime Learning Credit have income limits based on your modified adjusted gross income (MAGI). If your MAGI is below the threshold, you can claim the full credit. If it falls within the phase-out range, the credit is reduced. If your MAGI exceeds the upper limit, you cannot claim the credit at all.

For 2023 tax returns, the limits are $80,000 to $90,000 for single filers and $160,000 to $180,000 for married couples filing jointly. These limits change each year, so check the IRS website or Form 8863 instructions for the year you are filing. If you are close to the limit, calculate your MAGI carefully—it is not the same as your adjusted gross income.

If your income exceeds the limit, you cannot claim either credit, even if you paid substantial education expenses. In that case, you may be able to deduct up to $4,000 in may have access to education expenses instead, though this deduction is also subject to income limits.

Expenses you can claim that may not be on the 1098-T

The 1098-T does not report every may have access to expense. You can claim education expenses that the form does not list if you have receipts to prove you paid them. Books and supplies you bought outside the school bookstore count if they are required for your courses. Equipment like computers or laboratory materials also may have access to if the school requires them.

Transportation to and from school, meals, and housing do not count as may have access to expenses, even if you paid them while enrolled. The IRS has a specific list of what qualifies, and it is narrower than most people expect. If you are unsure whether an expense counts, the IRS website has examples, or you can ask the school's financial aid office.

When you file your taxes, you report the total may have access to expenses you paid, not just the amount on the 1098-T. If you have receipts for expenses the school did not report, you can add them to the amount on the form. Keep all receipts for at least three years in case the IRS asks about them.

What to do if you receive a 1098-T

When you receive your 1098-T, check it for accuracy. Verify that the student name and Social Security number are correct, and that the expenses reported match what you paid. If there is an error, contact the school's financial aid office when ready—they can issue a corrected form.

You do not have to file the 1098-T with your tax return, but you do need to report the information from it when you claim an education credit. If you use tax software, it will ask you to enter the amounts from the form. If you file by hand, you use Form 8863 to calculate your credit and attach it to your return.

Keep your 1098-T and all receipts for education expenses for at least three years. The IRS can ask for proof of the expenses you claimed, and the form alone is not always enough documentation.

Frequently Asked Questions

Do I have to claim a credit if I receive a 1098-T?

No. The 1098-T is informational—you are not required to use it. However, if you paid may have access to education expenses, claiming a credit usually reduces your taxes, so it is worth calculating whether you benefit from it.

Can I claim both the American Opportunity Credit and the Lifetime Learning Credit in the same year?

Not for the same student. You can claim only one credit per student per year. If you have multiple students in school, you can claim a different credit for each one, but for any single student, you must choose one.

What if my income is too high to claim a credit?

If your modified adjusted gross income exceeds the phase-out range, you cannot claim either education credit. You may be able to deduct up to $4,000 in may have access to education expenses instead, though this deduction also has income limits. Check Form 8917 for details.

Does the 1098-T include student loan interest?

No. Student loan interest is reported on Form 1098-E, not the 1098-T. You claim the student loan interest deduction separately on your tax return, and it has different income limits than the education credits.

Can I claim education expenses if the school did not send me a 1098-T?

Yes, if you paid may have access to expenses, you can claim them even without a 1098-T. You will need receipts and documentation to prove what you paid. Contact the school to ask why you did not receive the form—they may have sent it to the wrong address or the wrong student.