What Is Form 1098-T, Tuition Statement?

Form 1098-T, Tuition Statement, is an informational document issued by eligible educational institutions. You should receive this form by January 31 if you paid for qualified education expenses in the previous calendar year. Its purpose is to help you, or the person who can claim you as a dependent, determine eligibility for education-related tax credits. The form serves as a starting point for calculating potential tax benefits by summarizing your financial transactions.

Understanding Your Form 1098-T

The details on Form 1098-T are organized into several boxes, each reporting a specific piece of financial information. The data reported reflects transactions that occurred during the calendar year, which may not align with academic semesters. For example, a payment made in December for a spring semester that starts in January will be reported on the earlier year’s Form 1098-T.

Box 1 Payments Received for Qualified Tuition and Related Expenses

This box shows the total payments an educational institution received from you for qualified tuition and related expenses during the calendar year. The amount reported is the net payment after any tuition waivers have been applied. This figure represents payments the school processed, which may differ from the total amount you actually paid out-of-pocket.

Defining Qualified Tuition and Related Expenses

Qualified Tuition and Related Expenses (QTRE) includes tuition and fees required for enrollment or attendance at an eligible educational institution. It does not, however, include costs for:

• Room and board
• Insurance
• Medical expenses (including student health fees)
• Transportation
• Similar personal living expenses

Box 5 Scholarships or Grants

Box 5 reports the total amount of all scholarships or grants administered and processed by the educational institution during the calendar year. This figure includes scholarships, grants, and fellowship payments that the school applies to your student account. These amounts represent tax-free educational assistance that reduces the total qualified expenses you can use when calculating an education credit.

Other Key Boxes

Other boxes provide useful context. Box 4, “Adjustments for a prior year,” shows any reimbursements or refunds of qualified expenses you paid in a previous year. Box 6, “Adjustments to scholarships or grants for a prior year,” reports any reduction in aid that was reported for a prior year. A checkmark in Box 8 indicates that you were enrolled at least half-time for one academic period, a requirement for certain education credits.

Using Form 1098-T for Education Tax Credits

The information on Form 1098-T is the foundation for claiming education tax credits, which can directly reduce your income tax liability. The two primary credits are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is for qualified expenses for the first four years of higher education, while the LLC applies to undergraduate, graduate, and professional degree courses, including those taken to acquire job skills.

To claim either credit, you must file Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), with your tax return. The amounts on your Form 1098-T serve as the starting point for completing Form 8863. You will use the figure in Box 1 as a guide for the total payments made, but this is not automatically the amount you can claim.

You must calculate your own adjusted qualified education expenses. This involves taking the total amount you paid for QTRE and subtracting any tax-free educational assistance you received, such as the scholarships and grants shown in Box 5. For the American Opportunity Tax Credit, you can also include the cost of books, supplies, and equipment needed for your courses, even if they were not purchased from the school. The result is the net amount of expenses you can use to figure your credit, and your personal financial records are essential for verifying these amounts.

Common Issues and What to Do

If you find an error on the form, like an incorrect Social Security Number (SSN) or inaccurate financial figures, you should contact your school’s bursar or business office immediately. The school is responsible for issuing a corrected Form 1098-T. To correct an SSN, you will likely need to provide the school with a completed Form W-9S.

There are several reasons why you might not receive a Form 1098-T. An institution is not required to send a form if your courses did not offer academic credit, if you are a nonresident alien student who has not requested one, or if your qualified expenses were entirely paid for with scholarships and grants. If your grants in Box 5 exceed the payments in Box 1, a form is often not generated.

If you do not receive a Form 1098-T but believe you are eligible to claim an education credit, you can still do so. The absence of a Form 1098-T does not automatically disqualify you from claiming a tax credit you are otherwise entitled to receive. According to the IRS, you can use your own financial records, such as invoices and canceled checks, to substantiate the qualified expenses you paid.