What is IRS Tax Form 1098-T?
Published on September 12, 2024
by Grace Lorraine Angeles
Grace Lorraine, an IRS Enrolled Agent and CPA with 13 years of expat tax experience, specializes in US tax preparation, tax planning, and tax advice for US citizens and Green Card holders living and working abroad.
Table of Contents
Form 1098-T is a document that your US school sends you to show how much you paid for tuition and other related school expenses during the year.
Why is this form important?
This form is important because it helps you claim education tax credits. These credits can save you money on your taxes, especially if you or your family are paying for college.
The form shows the amount you paid in tuition, which you use to figure out how much of a tax credit you can claim.
This can make a big difference in how much you owe in taxes or how much you get back as a refund.
Who receives Form 1098-T?
You’ll receive Form 1098-T if you paid for college or other qualifying education costs.
Most students who are enrolled at least half-time in a college, university, or other post-secondary school will get this form.
If you or your parents are paying for school, you should expect to receive Form 1098-T.
However, not every school gives out Form 1098-T, but most colleges and universities do. This form is usually provided by schools that qualify for federal student aid programs.
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How do you use Form 1098-T to claim education credits?
- Get Form 1098-T: Your school sends you this form if you paid for college or other qualifying education costs during the year.
- Check Box 1: Box 1 on the form shows how much you paid for tuition and related fees. This number is important because it helps you claim tax credits.
Figure Out Which Credit You Can Claim:- American Opportunity Credit (AOTC): This credit is for students pursuing a degree and enrolled at least half-time. You can get up to US$2,500 per year for up to four years.
- Lifetime Learning Credit (LLC): This credit is for any year of college or job-related courses. It’s worth up to US$2,000 per tax return.
- Claim the Credit: When you do your taxes, fill out Form 8863 to claim your education credit. Attach this to your regular tax return (Form 1040).
- Keep Your Form: Hold onto Form 1098-T and any other paperwork in case the IRS asks for proof later.
You can only use the number in Box 1 (for tuition and fees) to claim your credit.
If you got scholarships or grants, shown in Box 5, you subtract that from the amount you paid because you can’t claim a credit for money that was already covered.
What information should be included on Form 1098-T?
- Box 1: Payments You Made
- This is the total amount you paid for tuition and school fees during the year.
- Box 2: (Not Used Anymore)
- This box used to show amounts billed but is now usually empty.
- Box 3: Change of Reporting Method
- If your school changed how they report this year, they’ll check this box.
- Box 4: Adjustments for Previous Year
- If the school adjusted amounts from a previous year, it’s shown here.
- Box 5: Scholarships or Grants
- This shows how much scholarship or grant money you received. This amount usually reduces how much of your expenses can count toward a tax credit.
- Box 6: Adjustments to Scholarships or Grants
- If your scholarship or grant amount was adjusted for a previous year, it’s listed here.
- Box 7: Future Terms
- This box is checked if you paid for a semester that starts in the first three months of the next year.
- Box 8: Half-Time Student Status
- This box is checked if you were enrolled at least half-time during the year.
- Box 9: Graduate Student Status
- This box is checked if you were a graduate student.
- Box 10: Insurance Reimbursements
- This is rarely used and reports any refunds of tuition by insurance.
Why didn’t I receive a Form 1098-T?
If you didn’t get a Form 1098-T, there could be a few reasons.
First, if your school expenses were fully covered by scholarships, grants, or employer assistance, your school might not send the form.
Also, if you took non-credit courses or attended a school outside the U.S. that doesn’t participate in US student aid programs, you might not receive it.
Lastly, if the total amount you paid for tuition was very low, typically under US$600, your school might not issue the form.
If you think you should have received one, reach out to your school’s financial aid or bursar’s office.
How do I correct errors on my Form 1098-T?
If you see mistakes on your Form 1098-T, like incorrect amounts or wrong personal details, contact your school’s financial aid or bursar’s office.
They are responsible for correcting and reissuing the form.
Once the corrections are made, the school will send you a new Form 1098-T and update the information with the IRS.
Can I still claim an education credit if my Form 1098-T shows $0 in Box 1?
Yes, you can still claim an education credit even if Box 1 on your Form 1098-T shows $0.
This might happen if you paid for tuition in a different tax year, or if the school didn’t report your payments correctly.
To claim the credit, you’ll need to provide other proof of payment, like receipts or a statement from the school showing how much you paid for tuition during the year.
Keep these documents when you file your taxes to support your claim. If you’re not sure what to do, consider getting help from a tax professional.
What should I do if I lose my Form 1098-T?
If you lost your Form 1098-T, don’t worry—you can easily get a replacement. The first step is to contact your school’s financial aid or bursar’s office. They can provide you with a copy of the form or give you instructions on how to access it online through the school’s student portal.
Make sure to request it as soon as possible so you have it when you file your taxes.
If you need it for tax filing and your school can’t provide a replacement quickly, you can still file your taxes using the tuition payment records you have, but be sure to keep detailed documentation in case the IRS asks for it later.
Does receiving a scholarship affect my eligibility for education credits?
Yes, receiving a scholarship can affect your eligibility for education credits.
Scholarships that are used to pay for qualified education expenses, like tuition and required fees, usually don’t count as taxable income.
However, this also means that you can’t claim a tax credit for the same expenses covered by the scholarship.
In other words, if your scholarship covers all your tuition, you likely won’t be able to claim education credits like the American Opportunity Credit or Lifetime Learning Credit.
If the scholarship only covers part of your expenses, you can still claim a credit for the remaining amount you paid out of pocket. Make sure to subtract any scholarship amounts from your total qualified education expenses before calculating your tax credit.
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