What Does 1098-T Box 1 Mean for Your Taxes?
The amount in your 1098-T Box 1 is a key starting point for tax filing. Learn how to adjust this figure to accurately claim education tax credits.
Form 1098-T, the Tuition Statement, is issued by colleges and universities to students. It reports financial details about a student’s enrollment and educational expenses, which are used to assess eligibility for tax benefits. The information on the form does not guarantee eligibility but serves as a reference for the taxpayer.
What the Box 1 Amount Represents
Box 1 of Form 1098-T shows the total payments an educational institution received for qualified tuition and related expenses during a calendar year. This amount includes payments from all sources and reflects the gross amount received, not reduced by scholarships or grants reported in Box 5. The figure can also include payments made in the current year for an academic period that begins in the next year.
Qualified expenses are defined by the IRS and include costs required for enrollment or attendance, such as tuition and mandatory student activity fees. Many other student costs are not considered qualified expenses and are therefore not included in the Box 1 amount. Common examples of non-qualified expenses are room and board, student health insurance fees, and transportation costs. Books and course materials may or may not be included, depending on whether they were required to be purchased directly from the institution.
Applying the Box 1 Figure to Your Taxes
The amount in Box 1 is the starting figure for calculating education tax credits, such as the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). These credits directly reduce the amount of income tax owed. Taxpayers must use their own financial records to determine the precise amount of qualified expenses they personally paid, as the figure on the form may not be the final amount you can claim.
To determine the final amount of expenses eligible for a credit, you must subtract any tax-free educational assistance you received from the total you paid. This includes scholarships and grants, which are often reported in Box 5 of the 1098-T. For example, if you paid $10,000 in qualified tuition and received a $4,000 scholarship, only the remaining $6,000 is eligible for a tax credit. This calculation is performed when completing IRS Form 8863.