The Ultimate Guide to Understanding Your 1098-T Form
As a student, you may have received a 1098-T form from your university or college. This form contains important information about your education expenses that can help you save money on your taxes. However, understanding the details of the 1098-T form can be overwhelming. In this ultimate guide, we will break down the various parts of the 1098-T form to help you better understand its purpose and how it can be used to your advantage.
What is a 1098-T form?
A 1098-T form is an IRS form that is used to report education expenses paid by or billed to a student during the tax year. The form is prepared by colleges and universities and is sent to students by January 31st each year. The purpose of the 1098-T form is to help students or their families determine if they qualify for education-related tax credits or deductions.
What information is included on a 1098-T form?
There are several pieces of information that can be found on a 1098-T form, including:
- The student’s identifying information, such as name and taxpayer identification number
- The college or university’s identifying information, including name, address, and taxpayer identification number
- The amount of qualified tuition and related expenses paid or billed during the tax year
- The amount of scholarships and grants received during the tax year
- The amount of any adjustments made for a prior year
- Whether the student was enrolled at least half-time during the tax year
It is important to note that not all forms will include all of this information. For example, if a student’s scholarships and grants were greater than their qualified tuition and related expenses, only the scholarship amount may be reported on the form.
How can a 1098-T form help with taxes?
One of the main benefits of receiving a 1098-T form is that it can help you save money on your taxes. There are two tax credits available to students or their families based on the expenses reported on the 1098-T form:
- The American opportunity tax credit (AOTC)
- The lifetime learning credit (LLC)
The AOTC allows students or their families to claim up to $2,500 per year for the first four years of post-secondary education. The LLC allows them to claim up to $2,000 per year for any level of post-secondary education. Both credits are subject to income limits and other eligibility criteria.
To claim either credit, you will need to fill out IRS Form 8863, Education Credits. You can use the information on the 1098-T form to help fill out this form and determine if you are eligible for either credit.
What should I do if there are errors on my 1098-T form?
If you notice any errors on your 1098-T form, such as an incorrect amount of tuition or scholarships reported, you should contact your college or university as soon as possible. They can help you correct any errors and resend the form if necessary. It is important to ensure that the information on the form is accurate before using it to file your taxes.
Conclusion
The 1098-T form can be a valuable tool for students and their families to save money on their taxes. By understanding the information included on the form and how it can be used to claim education-related tax credits, you can make the most of your educational expenses. If you have any questions about your 1098-T form, don’t hesitate to reach out to your college or university for assistance.
