A 1098-T is a tax form your college sends each year that reports the tuition and qualified expenses you paid (Box 1) and the scholarships and grants you received (Box 5). You use it to claim education tax credits like the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC), which can cut your tax bill by up to $2,500. It is one of the most valuable pieces of paper a college family receives, because it can turn tuition payments into a tax refund.
Many families file it away without realizing it unlocks real money. Here is what the boxes mean and how to use the form.
What is a 1098-T form?
The 1098-T, called the Tuition Statement, is an IRS form colleges issue to students (and make available to parents) by late January each year. It documents what was paid for qualified tuition and related expenses and how much scholarship or grant aid was applied. The IRS uses it to verify eligibility for education tax benefits.
If your student is a dependent, the parent who claims them generally uses the 1098-T on their return. For how the credits fit your overall plan, see our guide to paying for college.
What do the boxes on a 1098-T mean?
The two boxes that matter most are Box 1 and Box 5. Box 1 shows the total payments the school received for qualified tuition and related expenses during the year. Box 5 shows the total scholarships and grants administered by the school. The gap between them helps determine how much of your spending can count toward a tax credit.
The key boxes:
- Box 1: payments received for qualified tuition and fees.
- Box 5: scholarships and grants applied to your account.
- Box 7: indicates amounts that include the next academic term, which can affect timing.
Generally, the expenses you paid out of pocket (Box 1 minus the tax-free aid in Box 5) are what can support a credit.
How do you use a 1098-T to claim tax credits?
You use the 1098-T to claim the AOTC or the Lifetime Learning Credit when you file your federal tax return. The AOTC is worth up to $2,500 per eligible undergraduate for the first four years, and the LLC is worth up to $2,000 per return for a wider range of students. You generally cannot use the same dollars of expense for more than one benefit.
To choose the right credit, read the American Opportunity Tax Credit (AOTC), explained and Lifetime Learning Credit vs. AOTC: which tax break should you claim.
Is the scholarship money on a 1098-T taxable?
Sometimes. Scholarships and grants used for tuition and required fees are tax-free, but amounts used for room, board, or other non-qualified expenses can be taxable income. If Box 5 is larger than Box 1, part of your aid may be taxable, so it is worth checking. The form helps you and your tax preparer sort this out.
Because the rules are technical and depend on your situation, confirm the details with a tax professional or IRS guidance. For the broader strategy, see how to avoid double-dipping on education tax benefits.
Your next step
The 1098-T turns your tuition payments into possible tax savings, so do not file it away unread: match Box 1 against Box 5, then use it to claim the AOTC or LLC, worth up to $2,500. Because tax rules are specific, confirm your eligibility with a tax professional. Read our guide to paying for college, then create your free CollegeLens plan to factor tax credits into your real cost.
You're doing the hard, smart work of claiming every tax benefit you have earned. That's exactly how families lower the real cost of college.
-- Sravani at CollegeLens