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1098T FAQ

General Information

Please also access our Frequently Asked Questions for additional information.  

The Form 1098T provides you with your amounts paid for qualified tuition and related expenses, and the scholarships and grants which may reduce the amount of the education credit you can claim for the specified calendar year.   Please keep in mind that receipt of Form 1098T does not guarantee eligibility for any of the tax credits.  You must read the eligibility requirements to determine if you qualify.  For more information about Form 1098-T, click this

Depending on your income (or your family’s income, if you are a dependent), whether you were considered full or half-time enrolled, and the amount of your qualified educational expenses for the year, you may be eligible for a federal education tax credit. (You can find detailed information about claiming education tax credits in

The dollar amounts reported on your Form 1098-T may assist you in completing IRS Form 8863 – the form used for calculating the education tax credits that a taxpayer may claim as part of your tax return.

 The Â鶹´«Ã½ is unable to provide you with individual tax advice, but should you have questions, you should seek the counsel of an informed tax preparer or adviser.

Tax benefits relate to "qualified education expenses" which were paid via "qualified payments" during the 2024 calendar year.  The IRS describes qualified education expenses as mandatory charges required for enrollment at an eligible institution.  Non-qualifying related expenses and charges include room and board; fees involving athletics and insurance, transportation and similar personal or living expenses.  The IRS defines qualified payments as those made "out-of-pocket" including from student's earnings, a loan, a gift, an inheritance or personal savings.  Non-qualifying payments are included in the scholarships and grants box 5 on your Form 1098T.  These payments include those made from a Pell Grant or any other tax-free grant or scholarship, a tax-free distribution from an education IRA or a tax-free distribution from an employer-provided educational assistance program.  

We strongly encourage you to obtain IRS Form 8863, which is the form that must be filed to claim the education tax credits.  The instructions for Form 8863 provide useful information that is helpful in determining the best way to proceed to maximize tax benefits.  The form can be printed from the IRS general website listed in this memo.

Please also access our Frequently Asked Questions for additional information.  

Tax Credits

The American Opportunity Tax Credit (formerly known as the Hope Scholarship Tax Credit) is a per student tax credit for the first four years of postsecondary education.  It is a direct, non-refundable tax credit of up to $2,500 for payments made on qualified tuition and related expenses due to enrollment within the 2024 calendar year.  A tax credit equal to 100% of the first $2,000 of tuition and fees (less scholarships, grants, and tax-free tuition benefits), and 25% of the next $2,000 of tuition and related expenses is available to parents of dependent students or to students who are not claimed as dependents on their parents' federal tax return.  Certain income tests that must be met are described on Form 8863.

 The Lifetime Tax Credit is a per family tax credit which applies to qualified tuition and fee payments made within the 2024 calendar year.  The Lifetime Learning Tax Credit applies to tuition and related expenses for undergraduate, graduate, and continuing-education course work.  A family can claim on its tax return a credit of 20% of the first $10,000 of qualified expenses for a maximum benefit of $2,000 each tax year.  An eligible taxpayer must file a tax return and have an income tax liability to claim the credit.  As with the American Opportunity Tax Credit, there are tests that must be met for income and dependency in order to qualify for the credit.  Please refer to IRS form 8863 for more information.  Keep in mind that you cannot take the American Opportunity Tax Credit and the Lifetime Learning Tax Credit for the same student for the same tax year. 

Tax Deductions

Where applicable, IRS Form 1098E will be issued by lenders to assist you in taking advantage of the deduction for interest paid on student loans, which is a direct deduction from income.   For 2024, the maximum interest allowed is $2,500.   You should receive a Form 1098E from your lender if you are in repayment of interest on your student loans.

Other Provisions

Coverdell Education Savings Accounts and Roth Individual Retirement Accounts (IRA's) were introduced in 1998, and may be used to save or pay for education-related expenses.  There are also changes in the taxation of U.S. Savings Bond interest, and early withdrawals from IRAs for use in the payment of higher education expenses.  Please refer to the websites listed below in the Frequently Asked Questions for assistance.

Summary

Certain laws and regulations provide opportunities for tax savings regarding payments for tuition and other qualified expenses for attending post-secondary education.  It is important that you understand the particular provisions of each of these credits or deductions so that you can make the best decision for your particular circumstances.  The Â鶹´«Ã½ can not advise you as to which credit or deduction is best for you.  Due to the complexity of these laws, it may be beneficial to consult with a tax preparer to help you make the most informed decision. 

 We recommend that you take the following steps. 

  1. Read the above information and access the websites listed below to learn more about the details of the higher education tax provisions. IRS Publication 970 is an excellent resource to use.  Consult with professional tax advisors if necessary.
  2. Review your Form 1098T for your qualified payments and scholarships and grants.
  3. Access your accounts details in order to determine "qualified tuition and related expenses."
  4. Determine which credits are applicable based on the enrollment status of the student.
  5. Maximize tax benefits based on the student and family circumstances.

The web addresses and phone numbers in the right hand column may provide you with additional information and may help you better understand the tax laws and regulations.   

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