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This article was fact-checked by our editors and CPA Janet Murphy, senior product specialist with Credit Karma Tax®. It has been updated for the 2020 tax year.
College students or their parents who paid qualified tuition and college expenses during the tax year will need Form 1098-T from their school if they want to claim certain education credits.
Colleges and universities use the IRS form to report the total dollar amount a student or their parents paid for qualified tuition and expenses during the tax year. Schools are supposed to give a Form 1098-T to students by Jan. 31 of the calendar year following the tax year in which the expenses were paid.
Here’s what to know about this form and what to do with it when you file your federal income tax return.
Form 1098-T is an information return. The IRS requires businesses that make “reportable transactions” to file information returns to the IRS and provide a copy to the other party involved in the transaction. For example, people with a mortgage would likely receive a Form 1098 from their lender, reporting how much mortgage interest they paid during a tax year. With a 1098-T, the business — your college — reports how much qualified tuition and expenses you (or your parents) paid it during the tax year.
The IRS uses these forms to match data from information returns to income, deductions and credits reported on individual income tax returns. So if a taxpayer claims an education credit on their federal income tax return and the IRS doesn’t have a 1098-T in its system for them, then the IRS could follow up with that taxpayer to ensure they’re actually eligible for the credit.
Who issues a 1098-T?
Educational institutions that are eligible to participate in the Department of Education’s student aid programs can issue Form 1098-T, including colleges, universities, vocational schools, and other eligible post-secondary education institutions.
Insurers may also file Form 1098-T if they reimbursed or refunded qualified tuition and related expenses.
When is Form 1098-T due?
Colleges, universities and other institutions that issue Form 1098-T are required to provide a copy of the form to the student by Jan. 31 of the year following the tax year in which the expenses were paid. So a 1098-T for tuition paid in 2020 is supposed to be in the student’s hands by Jan. 31, 2021.
The form isn’t due to the IRS until Feb. 28 if filed by mail or March 31 if filed electronically. This way, if a student receives an incorrect 1098-T, they could have time to contact the college or university and request a correction before the school sends the information to the IRS.
Will I get a Form 1098-T?
Some information returns have minimum-filing thresholds. For example, if you pay student loan interest, the lender isn’t required to issue Form 1098-E unless you paid $600 or more in interest during the year.
But Form 1098-T doesn’t have a minimum threshold. Schools are required to issue this form if you paid any qualified education expenses, like tuition, fees or course materials that are required for enrollment – with some exceptions.
What education expenses qualify for college tax breaks?
Not every cost related to a college education will qualify you for a tax break on your federal income taxes. Typically, education-related tax breaks need to be for qualified education expenses. And different tax breaks have varying criteria for what’s considered a qualifying expense.
Education-related tax breaks include the American opportunity tax credit, lifetime learning credit and the student loan interest deduction.
There are some instances when your college doesn’t need to send a 1098-T, including …
- A course you took didn’t offer an academic credit
- You’re a nonresident alien (although you can request the form)
- Your school waived your tuition and expenses, or they were covered entirely by scholarships
- An employer or a government agency, like the Department of Veterans Affairs or the Department of Defense, covered your tuition and expenses entirely
If you believe you should have received a 1098-T but didn’t, it’s a good idea to reach out to your school and check the mailing address the school has on file.
“From a practical standpoint, the college or university will send the 1098-T to the address on record, which may be the student’s address on campus,” says Steven Rossman, CPA and shareholder at Drucker and Scaccetti, a tax-advising firm with offices in Philadelphia and Scranton, Penn. “The student or the student’s parents may need to log on to the university’s portal or go to the university’s accounting department to get the Form 1098-T.”
Form 1098-T is a relatively short form — it has 10 numbered boxes plus basic identifying information.
Here’s what’s included in each box.
- Filer information: On the left side of the 1098-T, the school issuing the form includes its name, address, telephone number and tax identification number. There’s also a box to include the student’s account number.
- Student information: Also on the left side of the form are boxes for the student’s name, address and tax identification number (like a Social Security number).
- Box 1: This box shows the total amount of all payments the school received from you for qualified tuition and related expenses during the calendar year — minus any refunds or reimbursements.
- Boxes 2 and 3 (no longer used): Until 2017, schools could report expenses in one of two ways: based on how much the student paid during the year or how much the school billed. Starting in 2018, schools use Box 1 to report payments received and Box 2 is no longer used. On the 2020 version of Form 1098-T, Box 2 and Box 3 are no longer used. Both boxes remain on the form as reserved for future use.
- Box 4: The school will complete this box if it needs to report an adjustment made for a prior year (but after 2002), like a refund issued in 2018 for tuition paid in 2017.
- Boxes 5 and 6: Box 5 shows scholarships or grants that the school processed and applied to your tuition during the tax year. Box 6 shows adjustments made to scholarships or grants reported in a prior year (but after 2002).
- Box 7: The school will check this box if some of the tuition you paid in the tax year applied to an academic period that starts in the first quarter of the following year — a payment made in December 2020 for tuition on the semester starting in January 2021, for example.
- Box 8: If you’re enrolled at least half-time during any academic period that began in the calendar year, the school should check this box.
- Box 9: This box indicates whether you were a graduate student.
- Box 10: This box is only used by insurers who issue reimbursements or refunds of qualified tuition and related expenses.
When you’re ready to file your federal income tax return, make sure you have your Form 1098-T on hand — if you received one. It can help you calculate two potentially valuable education credits — the American opportunity tax credit and the lifetime learning credit.
“The information reported on Form 1098-T can be used for claiming credits on the student’s or the parents’ tax return,” Rossman says.
So it’s a good idea to look into the requirements to decide who’s eligible to claim the education credits. Just make sure you aren’t double dipping by claiming them on both your parents’ return and yours (if you file a tax return as a dependent). That could trigger a notice from the IRS. Instead, evaluate the best way to apply potential credits before filling out your federal returns.
You can file your federal income tax return using Credit Karma Tax® and claim any education credits you may be eligible for, since the free online tax-preparation and filing service supports forms 1098-T and 1098-E.
Higher education isn’t cheap, but certain tax breaks can help defray the costs of getting a college degree. If you receive a Form 1098-T, it’s important to know what to do with it. The information on your 1098-T could help you claim valuable education credits.
You can learn more about tax benefits for education in IRS Publication 970.
Relevant sources: About Form 1098-T, Tuition Statement | American Opportunity Tax Credit | About Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) | Whom May I Claim as a Dependant? | About Publication 970, Tax Benefits for Education | Publication 970 (2019), Tax Benefits for Education
A senior product specialist with Credit Karma Tax®, Janet Murphy is a CPA with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.