Form 1098-T and Education Tax Credits, Explained

Your school just posted a Form 1098-T in your student portal, and you or a parent need to know what it means for this year's tax return. The 1098-T reports what your school received for tuition (box 1) and what it processed in scholarships and grants (box 5); you use those numbers, along with your own payment records, to figure out whether you or the parent who claims you can take the American Opportunity Tax Credit (up to $2,500 per student) or the Lifetime Learning Credit (up to $2,000 per return) for tax year 2026.

This is general information, not tax advice. Everything below was checked on irs.gov on November 10, 2026, including the IRS's draft 2026 Form 8863 instructions. Final forms can change, so confirm with IRS Publication 970, the IRS's Interactive Tax Assistant or a tax professional before you file.

What the 1098-T Is and When It Arrives

Form 1098-T, Tuition Statement, is an information return that colleges file with the IRS for students enrolled during the year. It isn't a bill and it isn't a tax form you file; it's a record you use to claim an education credit.

Schools generally have to furnish it by January 31. When that date falls on a weekend, the deadline moves to the next business day: Publication 970 for 2025 returns gave February 2, 2026, because January 31 was a Saturday. January 31, 2027, is a Sunday, so expect 2026 forms by about February 1. Many schools deliver it electronically through the student portal if you've agreed to that, so check there before asking for a paper copy.

Not every student gets one. The IRS's 1098-T instructions for 2026 say schools don't have to provide it for courses with no academic credit, for nonresident alien students (unless they ask), for students whose costs were fully waived or paid entirely by scholarships, or when an employer or government agency pays under a formal billing arrangement. If your school wasn't required to send one, the IRS's education credits Q&A says you may still be able to claim a credit if you can show enrollment and prove what you paid.

What Boxes 1 and 5 Mean (and the Others)

Two boxes do most of the work. Here is what the 2026 instructions say each box reports:

Two practical warnings. First, box 1 can differ from what you actually paid. Publication 970 warns that the amount on Form 1098-T "might be different" from what you paid, so use your own receipts and account statements too. Second, if your name or Social Security number is wrong, the IRS Q&A says to ask the school to correct the form.

AOTC vs. Lifetime Learning Credit

You can't claim both credits for the same student in the same year, and the same expenses can't count twice. This comparison is from the IRS's education credits page and the draft 2026 Form 8863 instructions:

Above the top of the phase-out range ($90,000 single or $180,000 joint), you can't claim either credit. Neither credit covers room and board, transportation or health fees, according to the IRS's page on qualified education expenses.

If you qualify for the AOTC, it's usually worth more: $4,000 of expenses gives a $2,500 AOTC, but only an $800 LLC. The LLC matters most for graduate students, students past their fourth AOTC year, part-time students taking a course or two, and working adults taking classes for job skills.

One more AOTC limit: students under 24 who are full-time students with earned income below half their own support, and whose parent is alive, generally can't receive the refundable part when claiming the credit themselves. The draft instructions list the exact conditions.

What Changed for 2026: The SSN Requirement

A 2025 tax law added an identification rule for both credits. According to the IRS's page on new SSN requirements for education credits, starting with tax year 2026:

• You (or one spouse, if filing jointly) and the student, if the student is your dependent, must have a Social Security number that's valid for employment and issued before the return's due date, including extensions.
• Taxpayers with an ITIN who claimed either credit before are no longer eligible unless they meet the new rule.
• An SSN issued only to receive a federally funded benefit, and not valid for work, doesn't qualify.

The draft 2026 instructions add a tip: on a joint return, only one spouse needs a valid SSN, even when the other spouse is the student. The income limits and credit amounts in the draft are the same as for 2025.

Why Pell Grants and Scholarships Can Shrink the Credit

Expenses paid with tax-free aid can't also earn a credit. The IRS's qualified expenses page says to total your qualified expenses, subtract tax-free assistance (the tax-free part of scholarships, Pell Grants, employer assistance and veterans benefits), and use what's left. Loans, savings, gifts and wages don't reduce it.

Here's how that plays out for one student, as an illustration only:

Publication 970's section titled "Coordination with Pell grants and other scholarships" describes a way scenario B can sometimes come out better. A student may choose to treat part of a scholarship or grant as taxable income, which frees up that much tuition to count toward the AOTC. Publication 970 sets conditions:

• It helps only when qualified expenses minus scholarships and grants are below $4,000.
• The grant must be one that, by its terms, may be used for nonqualified expenses such as room and board.
• The amount you treat as taxable can't be more than the nonqualified expenses (like rent and food) the student actually paid that year.

The trade-off is real: the student reports more income, which can raise their tax and, the publication notes, can affect other credits. The publication's worked examples show the result depends on the family's numbers. Don't try this without running both versions, ideally with tax software or a preparer, and keep records of the living costs you're counting. The IRS's qualified expenses page puts it simply: including a tax-free scholarship in income "may" increase the credit.

If you want to see how much Pell you may receive, our guide to Pell Grant amounts for 2026–27 explains the formula. If your employer pays part of your tuition, that money also reduces your qualified expenses; our post on employer tuition assistance for an online degree covers how those programs work.

Who Claims the Credit: Parent or Student

The 1098-T goes to the student, but the student isn't always the one who claims the credit. Publication 970 sets the rules:

• If a parent claims the student as a dependent, only the parent can claim the credit for that student's expenses, even if the student or a grandparent paid. Expenses paid by the dependent or a third party are treated as paid by the parent.
• If no one claims the student as a dependent, the student may claim the credit on their own return.
• If you file married filing separately, you can't claim either credit.

For many families, the question is who gets more out of it. A parent within the income limits who owes tax may use the full credit; a parent above $90,000 single or $180,000 joint gets nothing. Working adults who support themselves and aren't anyone's dependent claim the credit on their own return. Only one return can claim the credit for a given student.

A Short Checklist Before You File

• Download the 1098-T from the school portal and check the name and SSN.
• Gather your own records of what you paid in 2026, including books and course materials for the AOTC.
• Subtract tax-free grants, scholarships and employer assistance from your expenses.
• Decide who claims the student (parent or student) before either return is filed.
• Confirm that the taxpayer and the dependent student have SSNs valid for employment.
• Count how many years the AOTC has already been claimed for this student.
• Run the IRS's Interactive Tax Assistant, then claim the credit on Form 8863 with your return.

If anything on the form doesn't match your records, ask the school's bursar or student accounts office first. They can explain how they reported each box and issue a corrected form if needed.