Why did I receive a 1098-T form from my school?
Higher education can be expensive – and students and families look for financial aid or tax breaks that will offset the financial load. The 1098-T tuition statement is a tax form that helps you capture one of those great tax perks you don’t want to miss out on.
So, take note, students, you’ll get a 1098-T form, a tuition statement sent from your college or university, by January 31. To help you understand what the 1098-T is all about, we’ve outlined what this IRS tax form reports and how it affects your taxes.
Have other student tax filing questions? Be sure to visit our Tax Guide for College Students and learn about student tax forms that can be filed for free.
What is a 1098-T?
Not sure of the answer to the question, “What is a 1098-T form?” No worries, this is not a pop quiz!
Your 1098-T tax form, sometimes dubbed as the “college tax form” or the “tuition tax form” will show you the total payments of qualified education expenses (in Box 1) within a tax year. The school reports the amount to you and the Internal Revenue Service (IRS). Think of it as a receipt for your qualifying higher education payments.
Qualified expenses included on the 1098-T tax form — and what’s not
Payments for tuition and fees at eligible institutions are considered qualified expenses that might appear on your 1098-T form. They can also include related expenses like certain course materials if required for enrollment.
However, other payments or education-related expenses, like room and board, transportation, and similar personal costs, are not qualified education expenses, so they won’t show on your Form 1098-T. Also, tuition for continuing education courses not taken for academic credits or that are sports or hobby-related likely don’t qualify as qualified education expenses.
What is an eligible institution?
An eligible educational institution is a college, university, vocational school, or other institution. The school must be eligible to participate in the Department of Education’s student aid programs.
(View the full list of eligible institutions.)
What should you do with Form 1098-T?
The information on the form may have to be reported on your income taxes. In fact, it’s necessary to use information from this form to claim education tax credits on your return. These credits can be worth thousands of dollars.
Now, the real juicy stuff – tax credits! The 1098-T form isn’t just about reminding you how much you paid for that Organic Chemistry class you barely survived. It’s also your ticket to potential tax breaks and deductions. There are a couple to consider:
- The American Opportunity Tax Credit can be worth up to $2,500 for each eligible student. And, because the credit is partially refundable (up to 40%), you (or your parents) could get a refund even if you don’t owe any taxes. That’s right, the government could send you a check to help with your education expenses. Students who are under age 24 usually don’t qualify for the refundable credit, but their parents may qualify. This credit only applies to undergraduate tuition and is limited to four years. To claim this credit, you must be enrolled in a degree program at least half-time. (The college determines half-time status, which is shown on the 1098-T.)
- The Lifetime Learning Credit works for undergraduate or graduate tuition and doesn’t require a course load or enrollment in a degree program. This is a credit of up to $2,000. While it’s not refundable, it’s still a great way to reduce the tax you owe.
Formerly, the Tuition and Fees Deduction allowed up to $2,500 deduction for qualified higher education expenses. This deduction went away after 2020.
Adjustments Shown on 1098-T, Student Loan Interest Statement and Tuition Statement
The 1098-T form also reflects changes to your educational expenses from the prior year. An example is if you withdrew from a college course and received a refund. Another example is receiving a scholarship that reduced your tuition cost.
- Box 4 shows any adjustments that your school made for a prior year’s qualified expenses. If you have an amount showing in Box 4 of your 1098-T, it may reduce your allowable education tax credit claimed for the prior year. That, in turn, may result in an increased tax liability for the current tax year.
- Box 6 shows adjustments to scholarships or grants you received for a prior year. This amount may affect the education benefits you claimed for the prior year. You may have to file an amended income tax return (Form 1040-X) for the prior year.
Note: Qualified tuition expenses paid for with an education loan are still eligible for the education credits.
Help with filing IRS Form 1098-T
A 1098-T form has valuable tax information to claim an education credit.
If you need assistance with Form 1098-T and other school tax forms, H&R Block is here to help. Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.
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