Form 1098-T

Form 1098-T, Tuition Statement, is the IRS information return on which an eligible educational institution reports, for each enrolled student, the payments it received for qualified tuition and related expenses during the calendar year, the scholarships and grants it administered and processed, and adjustments to amounts reported for earlier years. Section 6050S of the Internal Revenue Code requires it, and an insurer that reimburses or refunds tuition under an insurance arrangement files one as well. The school files with the IRS and furnishes a statement to the student, which is the copy most families know as "the 1098-T".

The form is a record of what passed through the school's accounts, not a calculation of any tax benefit. It is the document the education credits rest on, because section 25A conditions both credits on receiving it, but the figure a family claims comes from what it paid during the tax year, reduced by tax-free assistance, which can be more or less than the form shows. Its name places it in the Form 1098 series, whose base form, the Mortgage Interest Statement, has nothing to do with education.

Who sends it, and who does not get one. An eligible educational institution is a college, university, vocational school or other postsecondary institution eligible to take part in the Department of Education's student aid programs, which covers most accredited public, nonprofit and private postsecondary schools. It files for each student it enrolls for any academic period and for whom a reportable transaction is made. The instructions excuse four groups: courses for which no academic credit is offered, nonresident alien students unless they ask for the form, students whose qualified tuition and related expenses are entirely waived or paid entirely with scholarships, and students whose costs are covered by a formal billing arrangement between the school and an employer or a government agency, such as the Department of Veterans Affairs, with no separate student account.

The boxes. Box 1 is the total of payments received from all sources during the calendar year for qualified tuition and related expenses, less refunds of those same payments made that year. It is not reduced by scholarships, so a tuition bill paid partly with a grant still shows the full payment. Boxes 2 and 3 are reserved. Box 4 reports refunds or reductions this year of amounts reported for a prior year, and box 6 reductions of scholarships reported for a prior year; either can mean a credit claimed earlier was too large. Box 5 is the scholarships and grants the school administered and processed, which the instructions say generally include every payment it receives from a third party, leaving out family members and loan proceeds: Pell Grants, payments from the Department of Veterans Affairs, and awards from civic and religious groups. A scholarship paid straight to the student never reaches the school, so it generally does not appear there. Box 7 is checked when box 1 includes amounts for an academic period beginning in January through March of the next year. Box 8 marks a student carrying at least half the normal full-time workload, box 9 a graduate student, and box 10 is used by insurers for reimbursements or refunds. The form also shows the school's employer identification number, which Form 8863 asks for whenever the American Opportunity Tax Credit is claimed or the student received a 1098-T from that school.

Why the form does not decide the credit. Publication 970 is direct that "the amount on Form 1098-T might be different from the amount you actually paid and are deemed to have paid", and that only amounts paid and deemed paid during the tax year count. The commonest gaps are timing (tuition paid in December for a term starting in January counts in the year it was paid, which is what box 7 flags), required course materials bought from someone other than the school (which count for the American Opportunity credit wherever bought and never appear on the form), and scholarships paid to the student directly, which are missing from box 5 but still reduce the expenses a credit can use. The form's own instructions to the student say as much: the scholarships for the year, "including those not reported by the institution", may reduce the credit.

Receipt is a condition, with two ways around a missing form. Section 25A(g)(8) allows no credit "unless the taxpayer receives a statement furnished under section 6050S(d)", except as the IRS provides. Publication 970 gives the exceptions. A credit may be claimed without the form where the school was not required to send one, if the taxpayer can show enrollment at an eligible institution and substantiate the payments. And where the school was required to send one and did not, the taxpayer or the student must ask the school for it after the January deadline and before filing, cooperate with the school's efforts to produce it, and still be able to show enrollment and substantiate the payments.

The identification number on the form is not the number the credit needs. The student's copy may show only the last four digits, the school may report an individual taxpayer identification number, and it may file with no number at all if it asked in writing and got none. For tax years beginning after 2025, section 25A(g)(1) as rewritten in 2025 requires a Social Security number on the return for the person claiming either credit and, where the student is someone other than the taxpayer or the taxpayer's spouse, for the student. The statute borrows its definition from the child tax credit, section 24(h)(7): a number the Social Security Administration issued before the return's due date, to a U.S. citizen or to someone lawfully admitted for permanent residence or otherwise permitted to work in the United States. Publication 970 shortens this to a Social Security number "valid for work". So where the student's own number has to be on the return, an individual taxpayer identification number on the 1098-T will not support either credit.

1. The school collects the student's name, address and taxpayer identification number, often on its own enrollment or financial aid forms, and tracks payments, refunds and the scholarships it processes for each student over the calendar year.
2. By January 31 it furnishes the statement to the student, on paper or electronically if the student consented, as section 6050S(d) requires, and files its copy with the IRS.
3. The student, or the parent who claims the student as a dependent, uses it as a starting point. The figures go nowhere directly. Form 8863 is where an education credit is figured, from expenses paid during the year, reduced by tax-free scholarships and similar assistance.
4. Differences are reconciled with records, such as the school's account statements, receipts for required materials bought elsewhere, and the paperwork from outside scholarship sponsors. The form is kept with the tax records, not attached to the return.

Consider an example. Tomasz attends a college on semesters and pays $7,000 for the fall 2026 term in August and $7,000 for the spring 2027 term, which starts in January, in December 2026. His 2026 Form 1098-T shows $14,000 in box 1 with box 7 checked, and $9,000 in box 5 for a scholarship the college applied to those two terms. He also paid $600 for required textbooks at an off-campus bookstore, which the college knows nothing about. Because the spring tuition was paid in 2026 for a term starting in the first three months of 2027, it counts for 2026 and cannot be counted again on the 2027 return. Assuming the scholarship is tax-free, the expenses available for the American Opportunity credit for 2026 are $14,000 − $9,000 + $600 = $5,600, and the credit's own rules take it from there.

Pros

• Gathers the year's tuition payments, school-processed scholarships, prior-year adjustments and the half-time and graduate-student flags in one document.
• Carries the school's employer identification number, which an American Opportunity Tax Credit claim must include.
• Receiving it satisfies the credits' statutory receipt condition, and the IRS gets the same figures from the school.

Cons

• Box 1 can differ from what a family may claim, because of timing, materials bought elsewhere and refunds, so the form cannot simply be copied onto Form 8863.
• Box 5 leaves out scholarships paid directly to the student, which still reduce the expenses a credit can use.
• It goes to the student, so a parent claiming the credit for a dependent depends on the student passing it along or on access to the school's portal.
• It does not say how much of a scholarship is taxable to the student, which has to be worked out separately.