What to Know About Tax Form 1090t (Form 1098-T)

While many taxpayers search for “Form 1090t,” the correct document is Form 1098-T, Tuition Statement. This form is an informational document, not a tax bill or a request for payment. Eligible educational institutions, such as colleges and universities, are required to issue this form to students for whom they have received payments for tuition and related expenses during the calendar year. The purpose of Form 1098-T is to help a taxpayer determine eligibility for education-related tax benefits.

The form is made available to students by January 31 of the year following the tax year being reported. It serves as a starting point by summarizing financial information related to a student’s educational costs. The figures on the form are for informational purposes and may not represent the total amount of deductible expenses a taxpayer can claim, as adjustments are often necessary.

Understanding Your Form 1098-T

Each box on Form 1098-T reports a specific piece of financial data. Box 1, “Payments received for qualified tuition and related expenses,” represents the total payments your educational institution received and applied to your account for qualified costs during the calendar year.

Box 5, “Scholarships or grants,” shows the total amount of scholarships, grants, and other similar aid that was administered and processed by the school. This figure is important because it reduces the amount of educational expenses you can use to claim a tax credit. The net amount of your out-of-pocket costs is generally the Box 1 amount minus the Box 5 amount, though other adjustments may be needed.

Box 4, “Adjustments made for a prior year,” will show any reductions in tuition charges that were reported on a previous year’s Form 1098-T. For example, if you paid for spring semester classes in December but then dropped a class in January, the resulting refund would appear in Box 4 on the following year’s form. This adjustment may require you to amend a prior year’s tax return if you claimed a credit based on the original, higher amount.

Two other boxes provide enrollment details. Box 7 will be checked if the amount in Box 1 includes payments for an academic period that begins in the first three months of the next calendar year. Box 8 is checked if you were considered at least a half-time student for at least one academic period during the year, a requirement for certain education credits.

Using Form 1098-T for Education Tax Credits

The information on Form 1098-T is used to determine eligibility for two education tax credits: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is for students in their first four years of higher education, while the LLC is available for undergraduate, graduate, and professional degree courses, including courses taken to acquire job skills. A taxpayer can only claim one of these credits per student in a single tax year.

Qualified education expenses are defined as tuition and fees required for enrollment or attendance at an eligible educational institution. The amount in Box 1 is the starting point, but you must ensure you only use the portion that represents qualified expenses. Costs that are not considered qualified include:

• Room and board
• Student health fees
• Insurance
• Transportation
• Similar personal living expenses

The scholarships and grants reported in Box 5 directly impact the amount of expenses you can claim. You must reduce your total qualified education expenses by the amount of any tax-free educational assistance you received, such as scholarships, grants, and employer-provided educational assistance. The remaining amount is what you can use to calculate your AOTC or LLC.

For example, if your Form 1098-T shows $10,000 in Box 1 and $4,000 in Box 5, your initial calculation for qualified expenses would be $6,000. You would then need to review your own financial records to confirm that the entire $10,000 paid to the school consisted of qualified tuition and fees. If any portion was for non-qualified expenses like housing, that portion must also be subtracted before calculating the credit.

Correcting Information and Filing Requirements

If you receive a Form 1098-T and believe the information is incorrect, you should not contact the IRS. You must contact your school’s student accounts or bursar’s office directly to discuss any potential errors, as the institution is responsible for the form’s accuracy. If a correction is needed, the institution will issue a corrected Form 1098-T.

Once you have verified the information on your Form 1098-T and determined your qualified education expenses, you will use this data to complete IRS Form 8863, Education Credits. This form walks you through the calculation for each credit, taking into account your expenses, modified adjusted gross income, and other eligibility requirements. You must complete Form 8863 to claim either the AOTC or the LLC.

Form 8863 is not filed by itself; it must be attached to your annual income tax return, Form 1040. You do not need to attach the Form 1098-T to your tax return, but you must keep it for your records along with receipts, bank statements, and other documents that support the expenses you claimed. These records are important in the event the IRS has questions about your eligibility for the education credit.