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Category: 1098's

Form 1098-T: Tuition Statement- Calculating Your Credit or Deduction

If you attended a college, university, technical school, or other qualifying educational institution during the tax year, you probably paid tuition and fees for your enrollment. Form 1098-T should have been issued to you by that institution to report to you information that could help you lower your tax bill. In most cases, there are 2 key figures reported on the form:

  1. The qualified expenses paid to the institution for qualified tuition and related expenses (Box 1 or Box 2); and
  2. The amount of scholarships or grants that you received to assist in paying for the qualified tuition and related expenses (Box 5).

The amount that you are eligible to use to reduce your tax bill is, in most cases, simply the amounts paid for tuition and fees minus the amount of scholarships you received. You can only receive a deduction or credit for the amount of expenses that you paid out of pocket.

If the amount in Box 5 (your scholarships) is GREATER THAN the amount in Box 1 (or Box 2, whichever is filled in on your 1098-T), then you cannot use any expenses to reduce your tax bill.

If the amount in Box 5 is LESS THAN the amount in Box 1 (or Box 2, whichever is filled in on your 1098-T), then you can use the expenses as a deduction or credit. Subtract Box 5 from Box 1 (or Box 2). The difference is generally the amount that was paid out of pocket and that can be reported on your return.

Box 1 or Box 2 is LARGER THAN Box 5. How can this benefit me?