Filing a 1098-T can increase your refund, but only if you have education expenses and meet specific income limits

The 1098-T form reports may have access to education expenses — tuition, fees, books, supplies — that you or a dependent paid during the tax year. The IRS uses this form to calculate two education tax credits: the American Opportunity Tax Credit (up to $2,500 per student) and the Lifetime Learning Credit (up to $2,000 per return). If you have education expenses and your income falls below the threshold for your filing status, filing the 1098-T can increase your refund by reducing the tax you owe or adding a refundable credit to what you already get back.

The amount your refund increases depends on which credit you claim, how much you paid in education expenses, and your total income. Not everyone with a 1098-T will see a refund increase — some people earn too much, some have already claimed the credit in prior years, and some paid for expenses that do not count. The form itself does not automatically increase your refund; you have to report the information correctly on your tax return.

Key Takeaways

  • The 1098-T reports education expenses that can lower your tax bill through the American Opportunity or Lifetime Learning credit.
  • Your refund increases only if you have may have access to expenses, your income is below the limit for your filing status, and you have not already claimed the credit for that student in a prior year.
  • The American Opportunity credit is partially refundable (up to $1,000 of the $2,500 maximum can come back as a refund), while the Lifetime Learning credit is not refundable.
  • If you are claimed as a dependent on someone else's return, you cannot claim the education credit yourself — the person claiming you must report it.

Who receives a 1098-T and when it arrives

Your school sends you a 1098-T if you paid may have access to education expenses during the tax year and the school is a participating institution (nearly all accredited colleges, universities, and may be able to access vocational schools participate). The form reports expenses paid in the calendar year, not the academic term, so expenses paid in January 2024 appear on the 2024 form even if they cover spring 2024 classes.

Schools mail the 1098-T by January 31 of the following year. You receive Copy 2 (the one for your records), and the IRS receives Copy A. If you paid expenses but did not receive a 1098-T by early February, contact your school's financial aid or bursar office — they may have an incorrect address on file, or the expenses may not have may have access to.

You do not need to receive a 1098-T to claim the education credit. If you paid may have access to expenses out of pocket and your school did not send the form, you can still report those expenses on your return. However, if you received a 1098-T, the IRS will cross-check your return against it, so the amounts must match or you must explain the difference.

Income limits that determine whether you can claim the credit

Both education credits phase out at higher income levels. If your Modified Adjusted Gross Income (MAGI) exceeds the limit for your filing status, you cannot claim either credit, and filing the 1098-T will not increase your refund. The income limits change each year and vary by filing status.

For the 2023 tax year (filed in 2024), the American Opportunity credit begins to phase out at $80,000 for single filers and $160,000 for married filing jointly. The Lifetime Learning credit phases out at $80,000 for single filers and $160,000 for married filing jointly. For the 2024 tax year (filed in 2025), the limits are slightly higher due to inflation adjustment. If your income is above these thresholds, you will not benefit from the 1098-T on your return.

What counts as a may have access to education expense on the 1098-T

The 1098-T reports only may have access to education expenses: tuition, required fees, books, supplies, and equipment needed for enrollment or attendance. Room and board, transportation, insurance, and personal expenses do not count, even if you paid them to the school. The school decides what to report based on IRS rules, so the amount on the form may be less than your total bill.

Expenses paid with certain funds do not reduce your credit. If you used a scholarship, grant, or tax-free education benefit (like a 529 plan withdrawal used for education) to pay for the expenses, you must subtract that amount from the expenses you report. For example, if you paid $5,000 in tuition and received a $2,000 scholarship, you can only claim $3,000 in expenses. The 1098-T does not make this adjustment for you — you do when you file your return.

How the American Opportunity credit increases your refund differently than Lifetime Learning

The American Opportunity credit is worth up to $2,500 per student per year and is partially refundable. This means that if the credit is larger than the tax you owe, the IRS will refund up to $1,000 of the unused credit. If you owe $800 in tax and may have access to for a $2,500 credit, your refund increases by $1,700 ($800 to cover the tax plus $900 of the refundable portion). You can claim this credit for up to four years per student.

The Lifetime Learning credit is worth up to $2,000 per return (not per student) and is not refundable. This means it can only reduce the tax you owe; it cannot create a refund. If you owe $1,200 in tax and may have access to for a $2,000 Lifetime Learning credit, your refund increases by $1,200 (the amount of tax eliminated), and the remaining $800 of the credit is lost. You can claim this credit in any year, with no limit on how many years.

You cannot claim both credits for the same student in the same year. If you have multiple students, you can claim American Opportunity for one and Lifetime Learning for another, but most filers benefit more from American Opportunity because of the refundable portion.

When you cannot claim the credit even with a 1098-T

If you are claimed as a dependent on someone else's tax return, you cannot claim the education credit yourself. The person claiming you (usually a parent) must report the 1098-T on their return. This is true even if you paid the expenses with your own money. If your parents do not claim the credit, you cannot claim it either, and your refund will not increase.

If you already claimed the American Opportunity credit for a student in four prior years, you cannot claim it again for that student. The Lifetime Learning credit has no year limit, but you can claim only one education credit per student per year. If you claimed the credit in the prior year and are filing an amended return for that year, filing the 1098-T again will not increase your refund further.

Some students are not permitted to claim any education credit. If you are a nonresident alien, you generally cannot claim the credit unless you choose to be treated as a resident alien for tax purposes. If you have a felony drug conviction, you are ineligible for the American Opportunity credit (though not the Lifetime Learning credit).

How to report the 1098-T on your return to increase your refund

When you file your tax return, you report the 1098-T information on Form 8863 (Education Credits), which then feeds into your main return. If you use tax software, you enter the amounts from the 1098-T, and the software calculates which credit gives you the larger benefit and applies it automatically. If you file by paper, you complete Form 8863 and attach it to your return.

The software or form will ask you to report the may have access to education expenses, your MAGI, and the student's information. If the expenses on your 1098-T are incorrect or if you paid additional expenses not reported on the form, you can adjust the amount you report. You will need to keep records of what you paid and what the school reported so you can explain any difference if the IRS questions it.

Your refund increases once the IRS processes your return and applies the education credit. If you are owed a refund and you claim the education credit, the credit reduces your tax liability first, and any remaining refund is paid to you. If you owe tax and you claim the credit, the credit reduces what you owe.

Frequently Asked Questions

Can I claim the education credit if my school did not send me a 1098-T?

Yes. You can report the expenses you paid even without the form, but you must have records showing what you paid and that the expenses were may have access to. The IRS may ask for proof, so keep receipts, tuition bills, and statements from the school. If the school did send a 1098-T to the IRS but not to you, the IRS will have the information and may question why your return does not match.

Does filing the 1098-T increase my refund if I have no tax liability?

If you owe no tax and have no income, the American Opportunity credit can still increase your refund because up to $1,000 of it is refundable. The Lifetime Learning credit cannot increase your refund if you have no tax to offset. If you are a student with little or no income, the American Opportunity credit may result in a refund even though you paid no tax during the year.

What happens if the 1098-T amount is wrong?

Contact your school and ask them to issue a corrected 1098-T (Form 1098-T with an X in the "Corrected" box). Once you receive the corrected form, file an amended return (Form 1040-X) with the correct amounts. If the school will not correct it and you believe the form is inaccurate, you can report the correct amount on your return and keep documentation to support it in case the IRS asks.

Can my parents claim the education credit if I am a dependent and I paid the expenses?

Yes. If you are claimed as a dependent, your parents claim the education credit based on the expenses you paid, not you. This is true even if you earned the money yourself or took out a student loan to pay. Your parents report the 1098-T on their return, and the credit increases their refund, not yours.

If I use a 529 plan to pay tuition, does the 1098-T still increase my refund?

The 1098-T reports the full tuition amount, but you must reduce it by the amount you paid with the 529 plan before claiming the credit. If tuition was $6,000 and you paid $4,000 from a 529 plan, you can only claim $2,000 in expenses. The 1098-T does not show the 529 withdrawal, so you make this adjustment yourself when you file your return.