Form 1098-T is the tuition statement schools file for their students reporting the educational expenses. Form 1098 T is mostly used for figuring out the allowable education tax credits the student can claim on his or her federal income tax return. However, if the parent claims the student as a dependent on their federal income tax return, the parent will use 1098-T.
In Form 1098 T, a variety of information will be reported. The below list shows what kind of expenses are reported.
- Payments received for qualified tuition and related expenses
- Adjustments to tuition and related expenses for a prior year
- Scholarships or grants
- Adjustments to scholarships or grants for a prior year
- Whether or not the amount shown on Box 1 includes amounts for an academic period starting January – March 2024 (for the 2023)
- Whether or not at least half-time student
- Whether or not if the student is a graduate
- Insurance contract reimbursement or refund
What tax credits can be claimed with 1098-T?
Form 1098 T can be used to claim educational tax credits as well as deductions. Use your 1098 T to claim Lifetime Learning Tax Credit and American Opportunity Tax Credit. The amount reported on 1098 T can also be used for claiming the tuition and fees deduction.
As for whether or not you need to use Form 1098 T to file a federal income tax return, it really depends on your total expenses. If you’ve paid out of pocket, make sure to file Form 1098 T with your federal income tax return as you are eligible for either one of the credits mentioned above. Given these credits are also refundable, it can increase your refund.
However, if you did not pay anything out of pocket, you don’t necessarily need to file it as you won’t be eligible for the educational credits. This applies to students who receive financial aid and cover their educational expenses through scholarships or grants.
