A Form 1098-T arrives from your college or university, and it looks like a tax document you must send somewhere. You do not file it. You use it to work out and claim an education credit on Form 8863, and a few of its boxes can change the size of that credit.
This guide explains each box, when you need the form, how the two education credits compare and what they are worth, with worked examples. Credit amounts are from IRS Publication 970 (2025 edition), the latest published. The IRS draft 2026 instructions for Form 8863 (September 2026) show the same credit amounts and income limits for 2026.
Form 1098-T is furnished to you by an eligible educational institution in which you are enrolled. The student copy says it must be used to complete Form 8863 to claim education credits. The school files the form with the IRS for each student it enrolls and for whom a reportable transaction is made, and gives you a copy.
| Box | What it shows | Why it matters |
|---|---|---|
| Box 1 | Total payments received by the school in the year for qualified tuition and related expenses, less any reimbursements or refunds made that year for those payments | Starting point for your education credit; it is not reduced by the scholarships in box 5 |
| Box 4 | Adjustments the school made for a prior year's qualified expenses | May reduce an education credit you claimed for the prior year |
| Box 5 | Total scholarships or grants the school administered and processed | Scholarships or grants for the year, including those not reported by the school, may reduce the credit you claim |
| Boxes 2 and 3 | Reserved for future use | Nothing to enter |
The figures on the form are what the school reported. They may not equal what you personally paid. The credit is based on qualified education expenses you paid, so compare the form with your own records.
The law requires a taxpayer (or a dependent) to have received Form 1098-T from an eligible educational institution, whether domestic or foreign, to claim the American opportunity credit or lifetime learning credit. There are exceptions where the school is not required to give the student a Form 1098-T, for example if the student is a qualified nonresident alien, has qualified education expenses paid entirely with scholarships, or has qualified education expenses paid under a formal billing arrangement. To claim the American opportunity credit you must also provide the school's employer identification number (EIN) on Form 8863, which you can get from the Form 1098-T.
The amounts below come from IRS Publication 970 (2025 edition), which is the current edition; the 2026 edition has not been published, so check it when it is.
| American opportunity credit | Lifetime learning credit | |
|---|---|---|
| Maximum credit | $2,500 per eligible student | $2,000 per return (20% of the first $10,000) |
| How it is figured | 100% of the first $2,000 plus 25% of the next $2,000 | 20% of the first $10,000 of qualified expenses for all eligible students |
| Refundable? | 40% may be refundable (not for some filers under age 24; see Pub. 970) | No, nonrefundable |
| Years available | Only 4 tax years per eligible student | No limit on the number of years |
| Income phase-out (MAGI) | $80,000 to $90,000 ($160,000 to $180,000 joint); none at $90,000 or more ($180,000 joint) | $80,000 to $90,000 ($160,000 to $180,000 joint); none at $90,000 or more ($180,000 joint) |
New for 2026: to claim either credit you need a Social Security number valid for work that was issued before the due date of your return, and a dependent student needs one too (IRS Pub. 970, 2025 edition, "What's New for Tax Year 2026"). On a joint return only one spouse needs a valid SSN.
| Case | Calculation | Credit |
|---|---|---|
| Student paid $4,000 of qualified expenses, AOTC, income below the phase-out | 100% of $2,000 + 25% of $2,000 = $2,000 + $500 | $2,500 |
| Taxpayer paid $6,600 of qualified expenses, LLC, income below the phase-out | 20% of $6,600 | $1,320.00 |
If your income is in the phase-out range, the credit is reduced; Publication 970 shows the formula. The scholarships in box 5 can also reduce the expenses that qualify, so a student with a large grant may have a smaller credit than the box 1 amount suggests.
The student loan interest deduction is covered in our student loan interest guide, state 529 plans in our 529 guide, and the other family credits in our child tax credit guide.
IRS Form 1098-T, Instructions for Forms 1098-E and 1098-T and IRS Publication 970.