Form 1098-T is an IRS information return that colleges and universities issue to students. It includes the student’s name, taxpayer identification number, address, enrollment status, tuition, and scholarships. This information helps students and parents determine eligibility for the Form 1098-T tax credit and other education-related credits.
How Form 1098-T Works
Every eligible student must have a Form 1098-T filed by their educational institution. Students can request a copy of their form and use it to claim tax benefits. While the form alone does not provide all details needed to file, it gives the basic information necessary to calculate the Form 1098-T tax credit.
Filing Requirements for Students
Students are not required to file Form 1098-T themselves, but keeping a copy can make tax preparation easier. The form is especially useful when applying for credits such as:
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The Hope Credit
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The American Opportunity Credit
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The Lifetime Learning Credit
These credits are designed to reduce the tax burden for parents and for independent students paying their own way. If a student is not claimed as a dependent, they may use their Form 1098-T to claim the credit on their own return.
Education Credits Linked to Form 1098-T
Hope Credit
The Hope Credit provides up to $1,650 for the first two years of college. The Form 1098-T tax credit information helps verify qualified expenses, such as tuition and enrollment fees.
American Opportunity Credit
The American Opportunity Credit expands on the Hope Credit. It offers up to $2,500 per year for up to four years of education. Up to 40% of this credit is refundable, making it more valuable for many students. Since 2009, the American Opportunity Credit has been one of the most common education-related tax credits.
Lifetime Learning Credit
The Lifetime Learning Credit is another option that students may qualify for. Unlike the Hope or American Opportunity Credit, it is not limited to a certain number of years and can apply to graduate courses as well. Form 1098-T information is also used when claiming this credit.
Why the Form 1098-T Tax Credit Matters
The Form 1098-T tax credit can significantly reduce education costs by lowering the amount of tax owed. Parents paying for their child’s education and independent students covering their own tuition can both benefit. By understanding what the form includes and how it connects to education tax credits, taxpayers can maximize their savings and stay compliant with IRS rules.
1098-T Filing Solutions
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