What is a 1098-T? The tuition statement, explained

What a 1098-T is

Form 1098-T, the Tuition Statement, is an information return that an eligible college, university, or vocational school files with the IRS and sends to you each January. It reports what the school received for qualified tuition and related expenses in Box 1, and the scholarships or grants it applied in Box 5. Its job is to support a claim for an education tax credit.

Three things it is not. It is not a bill. It is not a receipt for everything you spent on college. And it is not a statement of your refund. The most common reaction to a 1098-T is to look at the largest number on it and try to work out whether it is good news or bad news, and the honest answer is that the form alone cannot tell you.

Does a 1098-T get you a refund, or make you owe?

Either one, and which you get turns on a single comparison: whether your scholarships came to more than your qualified expenses. If you paid tuition out of pocket or with loans, the form supports a credit worth up to $2,500. If scholarships covered more than your qualified expenses, part of that money is taxable and entering the form can move a refund into a bill. A 1098-T is not free money, whatever you have heard, and both outcomes are completely normal.

These are not rare documents. Institutions filed 23,763,033 Forms 1098-T with the IRS during calendar year 2024, the batch covering the 2023 tax year, and 99.9 percent of them arrived electronically (IRS Publication 6961, reported as the actual count). For that same tax year, about 8.4 million returns claimed an education credit on Form 8863 (IRS Publication 4801), so close to three tuition statements go out for every return that claims a credit. Some of that gap is ordinary, and some of it is money left behind: when the Government Accountability Office examined 2009 returns, it found that about 14 percent of eligible filers claimed no education credit or deduction at all, at an average cost of $466 each (GAO-12-560, 2012). That study is old and predates the current rules, so treat it as a reason to check your own numbers rather than a current measurement.

Every box, decoded

The form is one page and most of it is blank. Below is a sample with figures we will use for the rest of this guide: a half-time-or-better undergraduate whose scholarships came to more than the tuition the school received. Hover or tap a field to read what it means.

Two of those boxes deserve their own note. Boxes 2 and 3 are blank on every current 1098-T. Schools once had a choice: report the amounts they billed you (Box 2), or the amounts they actually received(Box 1). Box 3 was the checkbox a school ticked when it switched between the two. That choice no longer exists. Every school now reports payments received, in Box 1, and the IRS marks Boxes 2 and 3 “reserved for future use.”

The change came from Section 212 of the Protecting Americans from Tax Hikes Act of 2015, which struck the billed-amount option out of the statute. The dates are worth separating, because they explain a lot of stale writing. In law it took effect for 2016. In practice it took effect for 2018, because the IRS granted schools penalty relief twice while they rebuilt their reporting, first for 2016 forms (Announcement 2016-17) and then again for 2017 forms (Announcement 2016-42). Schools could keep using Box 2 through the 2017 form without penalty.

The gap is worth knowing about when you read older guidance: if a source describes Box 2 as a box that might have a number in it, it is describing a form that has not existed for years.

Why Box 1 doesn’t match what you paid

This is the single most common complaint about the 1098-T, and it usually is not an error. The IRS says so itself: inPublication 970, its own guidance notes that the amount on Form 1098-T “might be different from the amount you actually paid and are deemed to have paid.” The form is a starting point, not a conclusion.

There are four separate reasons the numbers drift apart, and they often stack.

1. Box 1 excludes most of what college costs. Room, board, insurance, medical fees, and transportation are not qualified tuition and related expenses, so none of it appears. For a student living on campus this can be more than half the bill.
2. It runs on the calendar, not the academic year.Schools bill spring tuition in the autumn. If you paid in December for classes starting in January, that payment lands on the earlier year’s form. Box 7 exists to tell you this happened. It is also why a student who graduates in May often gets a final form showing very little: the spring tuition was already reported the year before.
3. It only counts money the school received. A $600 textbook from an online retailer is real money spent on education, and it will never appear in Box 1, because your school never touched it.
4. Refunds net against it. Drop a class and get money back, and Box 1 falls by that amount.

One more that surprises people every year: money you borrowed counts as money you paid. Tuition covered by a student loan or a parent PLUS loan is a payment the school received, so it lands in Box 1 in the year the school got it, not the year you start paying the loan back. That is the correct treatment, and it works in your favor, because those are expenses you can claim a credit against.

Why “qualified expenses” means five different things at once

Underneath all of that sits the real reason this form confuses people so reliably. The phrase “qualified education expenses” means five different things depending on which question you are asking, and all five are in play on one form. A textbook you bought on your own counts toward one credit, does not count toward the other, can be covered tax free by a scholarship, and is invisible in Box 1. None of that is a contradiction. They are simply different definitions written into different parts of the tax code.

The books row is the sharpest example, and it comes down to a single clause. For the American Opportunity Credit, the law substitutes the words “tuition, fees, and course materials” for “tuition and fees” (26 U.S.C. 25A(f)(1)(D)). That one substitution is the whole difference. Course materials count for the American Opportunity Credit whether or not you bought them from the school. For the Lifetime Learning Credit they count only if the school required you to buy them from the school.

The practical consequence: keep your bursar statement and your book receipts. The bursar statement shows what you actually paid and when, which is what the credit is based on. The 1098-T shows what the school reported. You will need both, and only one of them arrives in the mail.

Box 5, and when scholarships get taxed

Box 5 is where a tuition statement stops being paperwork and starts being consequential. It holds every scholarship and grant the school administered, including money that originated elsewhere and merely passed through: state grants, tribal funding, employer payments, private foundation awards.

Scholarship money is tax free only to the extent it went to qualified education expenses, and only if you are a degree candidate. Money that paid for room, board, or travel is taxable. So is anything that was really payment for services, such as a stipend that required you to teach or do research, which is why graduate assistants get caught by this more than anyone.

In our sample form, Box 5 is $14,000 and Box 1 is $9,200. Almost every explanation you will find treats that $4,800 gap as the taxable amount. That shortcut is wrong, and it is wrong in both directions.

The actual test compares your scholarships to your qualified education expenses, not to Box 1. Those are different numbers, for all the reasons in the section above. Your qualified expenses for this purpose can include required books and supplies that never appeared in Box 1, which pushes the taxable amount down. They exclude the room and board that your scholarship may well have been paying for, which pushes it up. Box 5 exceeding Box 1 is a signal to sit down with your bursar statement. It is not the computation.

The relief most people miss: you can reduce the taxable amount using qualified expenses the school never reported. Required books, supplies, and equipment count for this purpose even though they are nowhere in Box 1. Students routinely panic at the gap without realizing the receipts in their desk drawer shrink it.

When some of it is taxable, it is reported as income on the student’s own return, not the parent’s, even when the parent claims the student as a dependent and takes the credit. If the taxable amount already appears in Box 1 of a W-2, it is part of that wage figure. If it does not, it goes on Schedule 1 (Form 1040), line 8r, “Scholarship and fellowship grants not reported on Form W-2” (IRS Publication 970). Older guidance tells you to write “SCH” in the margin next to the wages line; current instructions route it to line 8r instead. A student with no job at all can end up needing to file a return because of scholarship money alone.

Can you just leave it off?

This is the question people ask once the refund number moves the wrong way, and the reasoning behind it is understandable but backwards. The form did not create the tax. Scholarship money that exceeded your qualified expenses is taxable income whether or not a piece of paper reports it, and whether or not you type it into anything. What the 1098-T does is tell the IRS what your school disbursed. Leaving it out of your return does not remove the income. It just makes your return disagree with a record the IRS already has.

The election printed on the back of your form

There is a counterintuitive strategy sitting in the fine print on the back of your 1098-T. The instructions to the student read:

“You may be able to increase the combined value of an education credit and certain educational assistance (including Pell Grants) if the student includes some or all of the educational assistance in income in the year it is received.”

In plain terms: deliberately choosing to treat some scholarship money as taxable can leave you better off overall. If a grant is one that may be used for living costs, you can apply it to room and board instead of tuition. That makes the grant taxable, but it frees up tuition expenses to claim a credit against. Trading a small amount of tax at a student’s low rate for a credit worth up to $2,500 is often a good trade, and for many families it is the difference between a credit and no credit at all.

It only works when the scholarship’s own terms allow it to be spent on something other than tuition. An award earmarked strictly for tuition cannot be reallocated. This is worth walking through with a preparer, and it is the single most valuable thing on this page for a family with a large Box 5.

The two credits it feeds

A 1098-T supports two possible credits, both claimed on Form 8863. You cannot claim both for the same student in the same year, though a family with two students in college can claim a different one for each.

For most undergraduates the American Opportunity Credit is the better one and it is not close: more money, partly refundable, and it counts books you bought anywhere. The Lifetime Learning Credit is what remains once a student has used up their four years, moved to graduate school, or dropped below half-time. Box 8 and Box 9 on the form are effectively telling you which one is in play.

One correction worth making, because it circulates widely and costs people money in both directions: the Lifetime Learning Credit is not refundable. It can reduce tax you owe to zero and no further. Only the American Opportunity Credit pays out beyond your tax liability, up to $1,000. Advice that says both credits can generate a refund is wrong.

The income limits are the same for both, at $80,000 to $90,000 for a single filer and $160,000 to $180,000 for a joint one. These are also worth knowing about because they no longer move. The Lifetime Learning Credit used to have its own lower, inflation-adjusted thresholds, and that adjustment was repealed effective for tax years beginning after 2020 (26 U.S.C. 25A). Both credits have shared these fixed figures since, and neither is indexed for inflation. Any source telling you the Lifetime Learning phase-out still moves each year is describing the pre-2021 rule.

A rule that changes for 2026

One genuine change arrives with the tax year currently in progress. Beginning in 2026, a Social Security number valid for work is the only taxpayer identification number that can be used to claim either education credit. The IRS states it directly: individuals claiming the American Opportunity Credit or the Lifetime Learning Credit “will be required to have a Social Security Number (SSN) that is valid for work and that was issued before the due date of the return” (IRS Publication 970).

If you claim the credit for someone else’s expenses, the student needs a valid SSN too. The IRS is explicit that where the person claiming the credit is not the student, the student must also have one to qualify. A parent who checks only their own number will get this wrong. For 2025 returns, an ITIN or an ATIN still works. For 2026 returns it will not. The change came from the One Big Beautiful Bill Act of 2025 and applies to tax years beginning after December 31, 2025. If a student in your household has been claiming a credit on an ITIN, that is worth sorting out well before filing season rather than discovering it in April.

If you’re a graduate student

Funded graduate students get a version of this form that behaves differently from an undergraduate’s.

The expensive mistake is counting your stipend twice. A typical funded package pays your tuition and pays you a stipend. If the stipend is compensation for teaching or research, it is already taxable and already reported in Box 1 of your W-2. But the same money can also swell Box 5, so a large gap between Box 5 and Box 1 appears on the 1098-T. Reading that gap as fresh income and adding it to Schedule 1 reports the same dollars a second time. This happens often enough that it has caught volunteer preparers, not just students. Before you add anything, check whether the amount is already sitting in your W-2.

A tuition waiver is not a scholarship, and the difference is in your favor. Many funded students see a big Box 5 built largely from a waiver, which is money that moved between two offices at the university and never reached them. A tuition reduction granted to a graduate teaching or research assistant is a qualified tuition reduction under 26 U.S.C. 117(d), and it is excluded from your income outright. It does not get traced against your qualified expenses the way an ordinary scholarship does.

Whether the waiver shows up in Box 5 at all varies by school, because the 1098-T instructions neither require nor forbid it. Where it does appear, its real effect is to reduce the expenses left over to claim a credit against, not to create taxable income. If someone is telling you to test a TA or RA tuition waiver for taxability, they are applying the ordinary scholarship rule to something that is not an ordinary scholarship.

Two smaller things. The American Opportunity Credit is limited to four tax years and to the first four years of postsecondary education, so by graduate school it is usually spent and the Lifetime Learning Credit is what remains. And research or conference expenses paid out of a fellowship are not deductible, even when the fellowship was awarded for exactly that purpose. If you are on an F-1 visa or a tax treaty applies, the rules diverge again, and that is genuinely a question for someone who handles nonresident returns.

If you paid with a 529

Pay tuition out of a 529 or a Coverdell account and you will receive a second form, a 1099-Q, reporting the distribution. The two forms describe the same tuition from opposite directions, and the rule that connects them is the one place families most often get into trouble without knowing it.

You cannot use the same dollar of expense twice. Expenses covered by a tax-free 529 withdrawal cannot also be counted toward an education credit. If $9,200 of tuition was paid entirely from a 529 and you also claim a credit on that same $9,200, part of the distribution stops being tax free.

The way out is the same allocation logic as the scholarship election, and it works because of the mismatch in the table above. Room and board is a qualified 529 expense but is never a qualified expense for a credit. Point the 529 withdrawal at room and board, keep tuition free for the credit, and you get both benefits without counting anything twice.

Concretely. Say tuition was $9,200 and room and board was $12,000, and you took $16,000 out of a 529. Apply $4,000 of the tuition to the American Opportunity Credit, which is the amount that produces the maximum $2,500, and point the whole 529 withdrawal at room and board plus the remaining $5,200 of tuition. Nothing is counted twice, the distribution stays fully qualified, and you still get the credit. Run it the lazy way, with the 529 covering tuition first, and the credit disappears.

Two details that decide who deals with the consequences. Only the earningsportion of a distribution can ever be taxed, not the contributions you put in, and a non-qualified distribution can carry an additional 10 percent tax on those earnings. And the 1099-Q goes to whoever received the money, so a distribution paid to the student lands on the student’s return while one paid to the account owner lands on theirs. That is worth deciding deliberately rather than discovering in April.

This is a genuinely common situation and it is almost entirely absent from what gets published about the 1098-T. If you have a 529, read the two forms side by side before anyone starts filling in a return. Our guide to the 1099 family covers what the 1099-Q itself is telling you.

Why your school demanded your Social Security number

Every January a wave of students get an email from the bursar asking for a Social Security number, usually mentioning a $50 penalty, and it reads like a scam. It is not.

Federal law requires eligible educational institutions to file a 1098-T for each enrolled student with a reportable transaction, and the return has to carry the student’s taxpayer identification number. The school collects it on Form W-9S, “Request for Student’s or Borrower’s Taxpayer Identification Number and Certification.” The school is not choosing to ask. It is complying with a filing requirement, and the penalty language in the email is quoting the rule that applies to you for failing to furnish a correct number, which can be waived for reasonable cause.

Two practical notes. Give it to the school through its official portal or the W-9S itself, never by replying to an email with your number in the body. And if your form arrives with the TIN box empty, that is the school telling you it never got your number, which is worth fixing before you try to claim anything.

While you are checking the form: confirm whose federal ID number you are looking at. Many schools use a third-party service to produce these, and that servicer normally appears in its own service-provider box rather than as the filer, but a servicer that actually receives payments on the school’s behalf does file as the filer. Since claiming the American Opportunity Credit requires the school’s employer identification number on Form 8863, check rather than assume.

Who doesn’t get one

Schools are not required to file a 1098-T in four situations, and the third catches far more people than the other three combined:

• Courses for which no academic credit is offered, even if the student is otherwise enrolled in a degree program.
• Nonresident alien students, unless the student asks for one.
• Students whose qualified tuition and related expenses are entirely waived or paid entirely with scholarships.
• Students whose expenses are covered by a formal billing arrangement, where the school bills an employer or a government body such as the Department of Veterans Affairs directly and keeps no separate account for the student.

The third one catches the most people, and it runs against the intuition. Aid does not earn you a form. The more completely aid covers your tuition, the more likely you get nothing, because there is no payment left for the school to report. That is why a student on a full ride can watch classmates compare tuition statements and receive none.

The part that matters most: not receiving a form does not mean you have no tax to deal with. The student most likely to get no 1098-T is the full-ride student, and the full-ride student is also the one most likely to have scholarship money that went to room and board, which is taxable. Schools stop at “we were not required to issue one,” and the reader reasonably hears “so there is nothing to do.” Those are not the same sentence. If aid covered more than your tuition and fees, work out the taxable share whether or not anything arrived in January.

Where to find yours, and by when

Schools must furnish the 1098-T to you by January 31. If it is February and nothing has arrived, that deadline is the useful thing to know, because it turns waiting into a phone call.

Check the student portal first. Most schools post the form electronically rather than mailing it, usually behind a consent screen you clicked past during enrollment, so “it never came” often means “it is sitting in the billing tab.” If it genuinely is not there, the office that issues it is the bursar or student accounts, not financial aid. Students get bounced between the two constantly, so ask for student accounts by name.

Claiming a credit when you never got a form

No form does not mean no credit. The general rule is that you need a 1098-T to claim an education credit, but the statute lets the IRS make exceptions, and it has made two. If your school was not required to furnish a form, or was required to and did not after you requested it and cooperated fully, you can still claim the credit provided you can demonstrate enrollment and substantiate what you paid. This is what your bursar statements are for.

If a figure on the form is simply wrong, ask the school to issue a corrected one rather than editing the number yourself. Schools can and do reissue. Where they will not, your own records still govern what you claim, so keep the bursar statement, the payment confirmations, and the receipts for required books together.

Boxes 4 and 6, and recapture

These two boxes are usually blank, and they are the only part of the form that can reach backwards and change a return you already filed.

Box 4reports a refund or a reduction made this year that relates to expenses reported on an earlier year’s form. If you claimed a credit on those expenses, you may have to give part of it back. The mechanism has a name most students never hear: recapture. You recalculate the old year’s credit using the corrected expenses, work out how much more tax you would have owed, and add that amount as additional tax on thisyear’s return. You do not amend the old one. Form 8863 and its instructions carry the worked steps.

Box 6 reports a reduction to scholarships or grants from an earlier year, and here the remedy is the opposite. For a Box 6 adjustment the IRS points you toward filing an amended return for the prior year on Form 1040-X.

Two adjustment boxes, sitting next to each other on the same form, with two different remedies. If either one has a number in it, that is the signal to pull the earlier year’s return and the earlier year’s 1098-T before doing anything else.

Student or parent?

The form carries the student’s name and the student’s Social Security number, which makes it look like the student’s document. The credit usually is not.

Whoever claims the student as a dependent claims the education credit.If a parent claims the student, the parent takes the credit, using a form that has the student’s identifying number on it and not theirs. This trips up self-preparing parents constantly, because nothing about the paperwork suggests it belongs on their return.

If nobody can claim the student as a dependent, the student claims the credit themselves. And the split can be genuinely strange in practice: the parent claims the credit while the student separately reports taxable scholarship income on their own return. Both are correct at the same time.

Three situations where the answer stops being obvious:

• Divorced or separated parents. The credit follows the dependency claim, so the parent who claims the student takes it, whoever actually wrote the tuition check.
• Married filing separately. This filing status rules out both education credits entirely. If you are weighing separate returns for another reason, price the lost credit into that decision.
• A parent who is phased out. Above the income limits the parent gets nothing, so families sometimes have the parent decline the dependency claim so the student can take the credit instead. It can work, but it is capped: where a parent is eligible to claim the student and simply does not, the student may claim only the nonrefundable part of the American Opportunity Credit, so the $1,000 refundable portion is off the table regardless. Add the value of whatever else the dependency claim was worth, and run it both ways before filing.

1098 vs 1098-E vs 1098-T

Three unrelated forms share the number 1098, two of them touch education, and the resulting mix-ups are constant. They have nothing in common except a number.

The pair that gets mixed up most often arrives together, in the same January stack. A 1098-E from a loan servicer supports a deduction for interest you paid. A 1098-T from a school supports a credit for tuition. Different senders, different rules, different lines on the return.

How long to keep it

Keep each 1098-T for at least three years after filing the return that used it, which is the ordinary window for the IRS to question a credit. Six years is the safer answer where scholarships or grants are involved, because unreported taxable scholarship money can understate income by more than 25 percent, and that opens a six-year assessment window. Prior-year adjustments are their own reason to hold on: a Box 4 or Box 6 entry makes one year’s form relevant to another year’s return.

Keep the bursar statements with them. The 1098-T is the summary; the bursar statement is the evidence, and it is the document that answers the questions the form cannot. A full undergraduate degree produces four tuition statements, four years of bursar records, scholarship award letters, and often a 1099-Q or two. Our retention guide covers where tax records sit against everything else worth keeping.

This is the kind of paperwork that matters exactly once a year and then has to be found again years later, often by someone who was not the one who filed it. Drop a 1098-T into Granite and it reads the form, pulls out the school, the tax year, Box 1, and Box 5, titles it, and files it into that year’s tax collection. Ask it a plain-English question later and you get the figure with a citation back to the page it came from. Everything is encrypted at rest, and you can start free.

One thing Granite does not do: it is not tax software and it does not give tax advice. It reads and files your documents and answers questions against them. Deciding which credit to claim, whether to treat a scholarship as taxable, or how to allocate a 529 withdrawal is work for you and your preparer. This guide is general information, not tax advice, and the rules change.