Question

Will reporting the information on my Form 1098-T increase my refund?

Answer

Your Form 1098-T can include qualifying expenses you paid during the year that make you eligible for an education credit or deduction, so reporting this information could increase your refund. Whether it does — and by how much — depends on your tax liability and which credit you claim.

The Lifetime Learning Credit is nonrefundable, so the credit will reduce the amount of taxes you owe. It won’t be returned to you as a refund if the credit is greater than the taxes you owe. If you don’t owe any taxes, this credit won’t provide a tax benefit for you.

The American Opportunity Credit is partially refundable, so if you qualify, you could have up to 40% of the credit refunded to you. This is true even if you didn’t owe any taxes. The remaining nonrefundable portion is applied to your tax liability. However, it wouldn’t be refunded to you if you didn’t owe taxes.

The tuition and fees deduction reduces the amount of income on your return. If you don’t owe any taxes, this deduction won’t provide you a tax benefit.

If taxable scholarships are reported on your Form 1098-T, it might decrease your refund, or you might have to pay taxes instead.

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