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1098-T Form Explained – If you’re a student or parent navigating tax season, you’ve likely encountered Form 1098-T. This essential tuition statement can play a key role in claiming education-related tax benefits. But does the 1098-T actually increase your tax refund? And how exactly does this form work? In this comprehensive guide, we’ll break it down step by step, using insights from official IRS guidelines and trusted tax resources to help you maximize your returns for the 2025 tax year.
What is Form 1098-T?
Form 1098-T, also known as the Tuition Statement, is an IRS document provided by eligible educational institutions like colleges and universities. It reports payments received for qualified tuition and related expenses (QTRE) during the calendar year. These expenses include tuition, enrollment fees, and required course materials, but not room and board, health fees, or optional costs.
The form helps taxpayers determine eligibility for education tax credits and deductions, such as the American Opportunity Credit (AOTC) or Lifetime Learning Credit (LLC). Schools must issue it to students who paid QTRE in the prior year and file a copy with the IRS. For the 2025 tax year, institutions send the form by January 31, 2026, and submit it to the IRS by February 28, 2026 (or the next business day if it falls on a weekend).
Insurers may also file Form 1098-T if they reimburse or refund QTRE. The goal? To ensure accurate reporting under the Taxpayer Relief Act of 1997 and subsequent laws.
Who Receives Form 1098-T and Who Files It?
Eligible students enrolled in post-secondary institutions receive Form 1098-T if they (or someone on their behalf) paid QTRE. This includes undergraduates, graduates, and even part-time students. If you’re a dependent, your parents might use the form on their return.
Institutions file the form for each student with a “reportable transaction,” which means any QTRE payment or scholarship activity. You don’t need to request it—schools automatically send it via mail or electronic portal. If you don’t receive one but think you should, contact your school’s bursar office.
Note: International students or those without a U.S. taxpayer ID may still get the form, but reporting requirements can vary.
Understanding the Boxes on Form 1098-T
Form 1098-T has several boxes that detail your educational finances. Here’s a breakdown for the 2025 tax year:
- Box 1: Payments Received for Qualified Tuition and Related Expenses – Total QTRE payments from all sources (e.g., cash, loans, scholarships applied to tuition) minus refunds. This is the key figure for calculating credits.
- Box 4: Adjustments Made for a Prior Year – Reductions to QTRE reported on a previous 1098-T (e.g., due to refunds or course drops). This may require recapturing prior credits, potentially increasing your tax liability.
- Box 5: Scholarships or Grants – Total aid received, including scholarships, grants, and fellowships. If this exceeds QTRE, the excess may be taxable income.
- Box 6: Adjustments to Scholarships or Grants for a Prior Year – Changes to aid reported previously, which could affect past tax returns.
- Box 7: Checkbox for Amounts Billed for Upcoming Academic Period – Indicates if Box 1 includes payments for classes starting in the next year (e.g., January-March 2026 for 2025 form).
- Box 8: At Least Half-Time Student – Checked if you were enrolled at least half-time, which is required for AOTC eligibility.
- Box 9: Graduate Student – Checked if you’re in a graduate program, affecting LLC eligibility.
- Box 10: Insurer Reimbursements or Refunds – Any QTRE refunds from insurance, which may reduce your eligible expenses.
Always verify these amounts against your records, as schools report based on calendar years, not academic years.
How Does Form 1098-T Affect Your Taxes?
The 1098-T doesn’t directly change your taxes—it’s informational. You use it to complete Form 8863 (Education Credits) when filing your return. QTRE from Box 1 (minus scholarships in Box 5) can qualify for credits that lower your tax bill.
However, if scholarships exceed expenses, the difference is treated as taxable income, potentially increasing your taxes. Adjustments in Boxes 4 or 6 might require amending prior returns.
For expats or non-residents, the form can still apply if you’re filing U.S. taxes.
Does the 1098-T Increase Your Tax Refund?
Not automatically—the 1098-T itself is just a report. But it can lead to a larger refund by enabling education credits. For instance:
- If your QTRE qualifies for the AOTC, you could get up to $2,500 per student, with $1,000 refundable even if you owe no taxes.
- The LLC offers up to $2,000 (20% of $10,000 in expenses), but it’s non-refundable—it only reduces taxes owed.
In cases where scholarships outpace expenses (e.g., Box 5 > Box 1), it might decrease your refund by adding taxable income. Overall, for most students with out-of-pocket costs, it helps reduce adjusted gross income (AGI) and boost refunds.
Education Tax Credits You Can Claim Using 1098-T
Here are the main benefits:
| Credit/Deduction | Maximum Amount | Refundable? | Eligibility Highlights |
|---|---|---|---|
| American Opportunity Credit (AOTC) | $2,500 per student | Yes (up to $1,000) | First 4 years of post-secondary education, at least half-time enrollment. |
| Lifetime Learning Credit (LLC) | $2,000 per return | No | Any post-secondary courses, including graduate and professional development. |
| Tuition and Fees Deduction (if revived) | Up to $4,000 | N/A | Above-the-line deduction for QTRE, phased out by income. |
Income limits apply—e.g., AOTC phases out between $80,000-$90,000 for singles ($160,000-$180,000 joint). You can’t claim both AOTC and LLC for the same student.
Common Mistakes to Avoid with Form 1098-T
- Assuming Box 1 Matches Your Expenses: It reports payments received, not billed amounts. Cross-check with receipts.
- Ignoring Adjustments: Boxes 4 and 6 can trigger tax recapture—don’t overlook them.
- Double-Dipping Credits: Only one credit per student; choose wisely.
- Missing the Deadline: File by April 15, 2026, for 2025 taxes.
Consult a tax professional if your situation is complex.
Frequently Asked Questions About Form 1098-T
- What if I didn’t receive my 1098-T?
Contact your school; you may still claim credits with other proof. - Is the 1098-T required to claim credits?
Generally yes, but exceptions exist for certain cases like non-receipt. - How much can I get back from my 1098-T?
It varies by expenses and income, but up to $2,500 via AOTC.
For more details, refer to IRS Publication 970.
In summary, Form 1098-T is your gateway to potential tax savings on education costs. By understanding its boxes and how it ties into credits, you can determine if it boosts your refund. Always use trusted tools like TurboTax or consult the IRS website for personalized advice. Ready to file? Gather your documents and start early for the best results.