Why you received it
Tuition and qualified education expenses reported by an eligible school
Income-document guide
Form 1098-T: Tuition Statement
Use Form 1098-T with your own payment records to evaluate the American Opportunity Tax Credit or Lifetime Learning Credit.
Where it usually flows
- • Form 8863 for education credits
- • Form 1040 through the credit calculated on Form 8863
Fields and records to check
- Box 1 payments received
- Box 4 prior-year adjustments
- Box 5 scholarships or grants
- Half-time and graduate-student checkboxes
How Form 1098-T works
Box 1 shows payments the school received for qualified tuition and related expenses during the calendar year — schools have reported payments received, rather than amounts billed, since 2018, so Box 1 should already reflect actual cash flow rather than a billing statement. Box 5 scholarships and grants matter because they generally reduce qualified expenses dollar for dollar before either credit is calculated; a scholarship restricted to nonqualified costs such as room and board, or one the student elects to include in taxable income, can free up more of the Box 1 payments for the credit instead. The American Opportunity Tax Credit is worth up to $2,500 per eligible student — 100% of the first $2,000 of qualified expenses plus 25% of the next $2,000 — and 40% of it (up to $1,000) is refundable, but only for a student in the first four years of postsecondary education who is enrolled at least half-time. The Lifetime Learning Credit is worth up to $2,000 per tax return — 20% of up to $10,000 in expenses across all students combined — is nonrefundable, and carries no enrollment-intensity or degree-track requirement, so it can cover part-time students and graduate coursework the AOTC cannot reach. Both credits phase out over the same MAGI ranges, $80,000 to $90,000 for single filers and $160,000 to $180,000 for married filing jointly, and married filing separately taxpayers cannot claim either credit at all.
Worked example
A single filer with $70,000 MAGI has $4,500 in Box 1 payments and $1,000 in Box 5 scholarships restricted to tuition. Qualified expenses for the AOTC are $4,500 minus $1,000 = $3,500: 100% of the first $2,000 plus 25% of the remaining $1,500, for a $2,375 gross credit. At $70,000 MAGI the taxpayer is below the $80,000 phase-out start, so no reduction applies, and 40% of the credit ($950) is refundable.
Form 1098-T FAQs
Does Form 1098-T guarantee an education credit?
No. Eligibility depends on the student, expenses, enrollment, income limits, prior credit use and whether scholarships or other tax-free assistance paid the costs.
Should I use Box 1 without checking my records?
No. Keep tuition statements, account ledgers, receipts and scholarship information because the credit is based on qualified expenses under the applicable rules.
Can I claim both the AOTC and the Lifetime Learning Credit for the same student in the same year?
No. You cannot claim both credits for the same student’s expenses in the same tax year, though different credits can apply to different students on the same return.