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

The 1098-T form reports may have access to education expenses paid during the tax year. If you received this form from your school, it means you paid tuition, fees, or related costs that may may have access to you to a tax credit. The American Opportunity Tax Credit and the Lifetime Learning Credit are the two main credits available, and they can reduce your tax bill dollar-for-dollar — which means a larger refund if you're owed one.

However, filing the 1098-T does not automatically increase your refund. You must actually have paid the expenses yourself, your income must fall below the limits set by the IRS each year, and you cannot claim the credit if someone else — like a parent — already claimed you as a dependent on their return. The form is a starting point, not a may provide.

Key Takeaways

  • The 1098-T reports education expenses, but you must report those expenses on your tax return to receive a credit and increase your refund.
  • The American Opportunity Tax Credit can be worth up to $2,500 per student per year, while the Lifetime Learning Credit maxes out at $2,000 per return.
  • Your income must stay below certain thresholds to claim either credit; the limits vary by filing status and change each year.
  • If a parent claims you as a dependent, they claim the education credit, not you — even if you received the 1098-T.
  • You report the 1098-T information on Form 8863 (Education Credits), which then feeds into your main tax return.

The two education credits and how much they're worth

The American Opportunity Tax Credit covers tuition, fees, and course materials for the first four years of undergraduate study. It is worth up to $2,500 per student per year. If your tax bill is lower than the credit amount, you may receive up to $1,000 of the unused credit as a refund — this is called the refundable portion.

The Lifetime Learning Credit covers tuition and fees for any level of education, including graduate school and professional certifications. It is worth up to $2,000 per return (not per student) and is non-refundable, meaning it can only reduce your tax bill, not create a refund beyond that.

You cannot claim both credits for the same student in the same year. If you have multiple students in your household, you can split the credits — one student gets the American Opportunity Credit and another gets the Lifetime Learning Credit, for example — but each student can only be claimed once per year.

Income limits that determine whether you can claim the credit

Both credits phase out at higher income levels. For 2023, the American Opportunity Tax Credit begins to phase out at $80,000 of modified adjusted gross income (MAGI) for single filers and $160,000 for married filing jointly. The Lifetime Learning Credit phases out starting at $80,000 for single filers and $160,000 for married filing jointly.

These income thresholds change each year, so check the IRS website or your tax software for the current year's limits. If your income exceeds the phase-out range, you cannot claim either credit. If your income falls within the phase-out range, the credit amount is reduced proportionally.

MAGI is not the same as your standard adjusted gross income. It includes certain types of income that are normally excluded, such as foreign earned income or student loan interest. Your tax software will calculate MAGI for you, but it is worth understanding that a higher income can eliminate the credit entirely.

When you cannot claim the credit even if you have the 1098-T

If someone else claims you as a dependent on their tax return, you cannot claim the education credit yourself. This is the most common reason a 1098-T does not increase a refund. Parents often claim their adult children as dependents while the student is in school, which means the parent must claim the education credit instead.

You also cannot claim the credit if the expenses were paid by a scholarship, grant, or employer reimbursement. The credit is only for expenses you or your family paid out of pocket. If your school issued a 1098-T that includes scholarship money, you must subtract that amount from the expenses before calculating the credit.

Additionally, if you are a nonresident alien for tax purposes, you generally cannot claim the education credits. Resident aliens and U.S. citizens are may be able to access, but the rules are stricter for nonresidents.

How to report the 1098-T on your tax return

You report the 1098-T information on Form 8863 (Education Credits). This form walks you through the calculation: it asks for the expenses from the 1098-T, subtracts any scholarships or grants, applies the income limits, and calculates which credit you can claim and for how much.

Form 8863 then feeds the credit amount into your main tax return (Form 1040). The credit reduces your tax liability line by line. If the credit is larger than your tax bill, the refundable portion of the American Opportunity Credit (up to $1,000) becomes part of your refund.

You do not need to attach the 1098-T itself to your return, but you should keep it with your records. If the IRS questions your return, you will need to show proof that you paid the expenses.

What to do if the 1098-T amount seems wrong

Schools sometimes report incorrect amounts on the 1098-T. Common errors include including expenses that are not may have access to (like room and board or student health fees), or including scholarship money that should have been subtracted. If you believe the amount is wrong, contact your school's financial aid office and ask them to issue a corrected 1098-T.

You can also report the correct amount yourself on Form 8863, even if it differs from the 1098-T. The IRS allows you to use the actual amount you paid if it is different from what the school reported. Keep receipts, tuition bills, and payment records to back this up.

If you paid education expenses but did not receive a 1098-T, you can still claim the credit. You will need to gather your own documentation of what you paid, but the credit is available whether or not the school issued the form.

Frequently Asked Questions

Will filing the 1098-T automatically increase my refund?

No. The 1098-T is a report of expenses, not a claim for a credit. You must report those expenses on Form 8863 and meet all the requirements — income limits, dependent status, and actual payment — before the credit reduces your tax bill or increases your refund.

Can I claim the education credit if my parents claim me as a dependent?

No. If you are claimed as a dependent, your parents must claim the education credit if they want to use it. You cannot claim it yourself. Your parents can choose not to claim it, which would allow you to claim it on your own return, but only if you file separately and are not claimed as a dependent.

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

Tuition and fees required for enrollment or attendance are may have access to. Course materials like textbooks and supplies are may have access to if purchased from the school. Room and board, insurance, transportation, and personal expenses do not count, even if you paid them while in school.

Can I claim both the American Opportunity and Lifetime Learning credits in the same year?

No. You can claim only one credit per student per year. However, if you have multiple students, you can claim different credits for different students — for example, the American Opportunity Credit for one child and the Lifetime Learning Credit for another.

What if my income is too high to claim the credit?

If your MAGI exceeds the phase-out range for the year, you cannot claim the credit. However, you may be able to claim a deduction for tuition and fees instead, which is a different benefit with different income limits. Check the IRS website for the current year's rules on both options.