How To Enter A 1098-T On TurboTax

Quick answer

• Gather your Form 1098-T, student’s Social Security number, and potentially other educational expense receipts.
• Log in to your TurboTax account and select the “Education” section.
• Follow the prompts to enter your 1098-T information, matching the fields on the form.
• TurboTax will guide you through questions about qualified education expenses to determine eligibility for credits.
• Be prepared to provide details on payments made and any scholarships or grants received.
• Double-check all entries against your original 1098-T for accuracy before filing.

What to check first (before you file or change withholding)

Filing Status

Your filing status (Single, Married Filing Jointly, Head of Household, etc.) significantly impacts your tax liability and eligibility for certain education credits. Ensure you are using the most advantageous status for your situation.

Income Sources

Identify all sources of income, including wages, freelance earnings, investment income, and any other taxable income. Accurately reporting all income is crucial for calculating your correct tax due or refund.

Withholding or Estimated Payments

Review your W-2s and any 1099 forms to confirm the amount of taxes already withheld from your paychecks. If you are self-employed or have significant other income, verify that your estimated tax payments are on track.

Deductions and Credits

Understand which deductions and credits you might qualify for. For education expenses, Form 1098-T is a key document for claiming the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Keep records of all qualified expenses beyond what’s reported on the 1098-T.

Deadlines and Extensions (General)

Be aware of the federal tax filing deadline, typically April 15th. If you need more time, you can file for an extension, but remember that an extension to file is not an extension to pay.

Step-by-step (simple workflow)

1. Gather Your Documents:

• What to do: Locate your Form 1098-T (Tuition Statement) and have it readily available. Also, have your student’s Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) handy.
• What “good” looks like: You have the official 1098-T form from the educational institution and the correct SSN/ITIN for the student.
• Common mistake: Using an incorrect SSN/ITIN.
• How to avoid it: Double-check the SSN/ITIN against other official documents or confirm directly with the student.

2. Log In to TurboTax:

• What to do: Access your TurboTax account online or open the TurboTax software.
• What “good” looks like: You are logged in and ready to navigate the tax preparation process.
• Common mistake: Starting a new return when you meant to continue an existing one.
• How to avoid it: Ensure you’re opening the correct tax year and the return you intend to work on.

3. Navigate to the Education Section:

• What to do: In TurboTax, look for a section related to education, tuition, or student expenses. It’s often found under “Deductions & Credits” or a dedicated “Education” tab.
• What “good” looks like: You’ve found the specific area within TurboTax designed for educational tax forms.
• Common mistake: Missing the dedicated education section and trying to manually input information elsewhere.
• How to avoid it: Follow TurboTax’s guided prompts; it will usually direct you to the right place.

4. Indicate You Have a 1098-T:

• What to do: TurboTax will ask if you received a Form 1098-T. Select “Yes.”
• What “good” looks like: You’ve clearly indicated that you have this form to enter.
• Common mistake: Skipping this step or incorrectly stating you don’t have a 1098-T when you do.
• How to avoid it: Read the questions carefully and answer them truthfully based on your documentation.

5. Enter 1098-T Information:

• What to do: TurboTax will present fields that correspond directly to your Form 1098-T. Enter the amounts from each box (e.g., Box 1 for amounts paid for qualified tuition and related expenses, Box 5 for scholarships and grants).
• What “good” looks like: All numbers entered into TurboTax exactly match the numbers on your 1098-T.
• Common mistake: Transposing numbers or entering amounts from the wrong box.
• How to avoid it: Go box by box, carefully comparing your form to the TurboTax input screen.

6. Specify the Student:

• What to do: You’ll need to link the 1098-T to the student. TurboTax will ask for the student’s SSN/ITIN and their relationship to you (e.g., yourself, dependent).
• What “good” looks like: The student’s correct SSN/ITIN is entered, and their relationship to you is accurately stated.
• Common mistake: Entering the wrong student’s information if you have multiple students.
• How to avoid it: Ensure you are entering the details for the student whose expenses you are claiming.

7. Answer Questions About Expenses:

• What to do: TurboTax will ask follow-up questions about qualified education expenses, even those not listed on the 1098-T. This might include books, supplies, and equipment required for enrollment.
• What “good” looks like: You’ve accurately reported all eligible expenses.
• Common mistake: Not accounting for expenses not directly reported on the 1098-T, like certain books or supplies.
• How to avoid it: Keep receipts for all education-related purchases and consult TurboTax’s guidance on what qualifies.

8. Address Scholarships and Grants:

• What to do: TurboTax will prompt you to confirm amounts from Box 5 of the 1098-T (scholarships and grants). You may need to specify if these were used for non-qualified expenses.
• What “good” looks like: You’ve correctly entered scholarship and grant amounts and clarified their usage.
• Common mistake: Not understanding how scholarships affect credit eligibility.
• How to avoid it: TurboTax will guide you on how these impact your return, but generally, scholarships used for non-qualified expenses don’t reduce your credit amount.

9. Review Credit Eligibility:

• What to do: Based on the information you’ve entered, TurboTax will calculate your eligibility for the AOTC or LLC.
• What “good” looks like: TurboTax shows you the potential education credit you can claim.
• Common mistake: Assuming you automatically qualify for the maximum credit.
• How to avoid it: Understand the eligibility requirements for each credit, which TurboTax will outline.

10. Verify Totals and Continue:

• What to do: Review the summary of your education expenses and any calculated credits. Proceed with the rest of your tax return.
• What “good” looks like: You’ve reviewed the education-related calculations and are satisfied with the results.
• Common mistake: Rushing through the review stage.
• How to avoid it: Take your time to ensure all education-related entries are correct before moving on.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Incorrectly identifying filing status	Paying more tax than necessary or claiming incorrect credits/deductions.	Review IRS guidelines for filing statuses and choose the one that best fits your circumstances.
Omitting income sources	Underpaying taxes, leading to penalties and interest.	Gather all income statements (W-2s, 1099s, etc.) and report every dollar earned.
Incorrectly entering 1098-T box amounts	Understating or overstating qualified expenses, potentially losing out on credits or claiming them incorrectly.	Double-check each box on your 1098-T against the TurboTax input fields.
Forgetting to claim all qualified expenses	Missing out on potential tax credits or deductions.	Keep detailed records and receipts for all education-related expenses beyond what’s on the 1098-T.
Not understanding scholarship/grant impact	Incorrectly calculating education credits.	Pay attention to how TurboTax asks about scholarships and grants, especially if they were used for non-qualified expenses.
Claiming credits for ineligible students/courses	Incorrectly claiming credits, which the IRS may disallow.	Ensure the student and expenses meet the IRS criteria for the American Opportunity Tax Credit or Lifetime Learning Credit.
Failing to keep supporting documentation	Inability to prove your claims if audited by the IRS.	Retain copies of your 1098-T, receipts for expenses, and other relevant documents for at least three years.
Missing the tax filing deadline without an extension	Late-filing penalties and potential interest on any tax due.	File your return or an extension request by the due date.
Not verifying student’s SSN/ITIN	Delays in processing your return or rejection if the SSN/ITIN doesn’t match IRS records.	Confirm the student’s SSN/ITIN is correct before entering it into TurboTax.
Incorrectly reporting payments made	Miscalculating the basis for education credits.	Ensure you are entering the actual amounts paid for qualified tuition and fees, not just the amounts billed.

Decision rules (simple if/then)

• If you paid qualified tuition and related expenses for yourself or a dependent, then you likely qualify to claim an education credit because the IRS offers tax benefits for higher education costs.
• If the 1098-T shows an amount in Box 1, then this amount represents qualified expenses that can be used to calculate education credits or deductions.
• If the 1098-T shows an amount in Box 5 (scholarships and grants), then you need to understand how these funds were used, as they can reduce the amount of education expenses you can claim for credits.
• If you paid for books and supplies that were required for enrollment and not covered by the 1098-T, then you can often include these costs when calculating your education credit, so keep your receipts.
• If you are claiming a dependent who is enrolled in college, then you will enter their 1098-T information on your tax return, not theirs.
• If the student’s enrollment was for at least one academic period beginning in the tax year, then the expenses paid can be considered for that tax year.
• If you received a 1098-T but the student did not attend more than half-time or was not taking courses leading to a credential, then you might not be eligible for the American Opportunity Tax Credit but could still be eligible for the Lifetime Learning Credit.
• If your modified adjusted gross income (MAGI) is too high, then your ability to claim education credits may be limited or eliminated.
• If you are unsure whether an expense is qualified, then consult IRS Publication 970, Tax Benefits for Education, or a tax professional.
• If you are using TurboTax and it asks about a 1098-E (Student Loan Interest Statement), then enter that information separately, as it relates to student loan interest deductions, not tuition expenses.
• If you are claiming the American Opportunity Tax Credit, then the student must be pursuing a degree or other recognized educational credential and be enrolled at least half-time for at least one academic period.
• If you are eligible for both the AOTC and LLC, then you can generally only claim one credit per student per year, and the AOTC is often more beneficial if you qualify.

FAQ

Q1: What is Form 1098-T?

Form 1098-T, Tuition Statement, is an IRS tax form that an educational institution sends to students and the IRS. It reports tuition and related expenses paid to the institution, as well as scholarships and grants received.

Q2: Do I need to have the 1098-T to claim education credits?

While the 1098-T is essential for reporting tuition payments, you may also need receipts for other qualified expenses like books and supplies that aren’t listed on the form. However, the 1098-T is generally required to initiate the process in tax software like TurboTax.

Q3: What if the amount on my 1098-T doesn’t match what I paid?

The 1098-T reports amounts billed and paid during the tax year. There can be discrepancies due to timing or specific fees. If you believe it’s incorrect, contact the educational institution for a corrected form or be prepared to provide your own records of payments.

Q4: Can I claim education credits if I paid with loans?

Yes, payments made with student loans are generally considered your payment for qualified education expenses and can be used to claim education credits, provided all other eligibility requirements are met.

Q5: What’s the difference between the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC)?

The AOTC is for the first four years of higher education, can be up to a certain amount, and is partially refundable. The LLC is for any level of education and is nonrefundable, offering a credit for up to a certain amount of expenses.

Q6: Can I claim education credits for my child’s kindergarten tuition?

No, education credits are generally for post-secondary education (college or vocational school). Kindergarten and K-12 tuition expenses do not qualify for these federal education tax credits.

Q7: What if I received a scholarship that exceeded my tuition costs?

If your scholarships and grants (Box 5 on 1098-T) were more than your qualified education expenses (Box 1 on 1098-T), you generally cannot claim education credits for the excess amount. However, if the scholarship was specifically for non-qualified expenses (like room and board), it might not reduce your credit.

Q8: How does TurboTax help me enter the 1098-T?

TurboTax has a guided interview process that walks you through entering the information from your 1098-T form. It asks specific questions to help you determine your eligibility for education credits and accurately calculate them based on your input.

What this page does NOT cover (and where to go next)

• Specific eligibility requirements for the American Opportunity Tax Credit and Lifetime Learning Credit beyond what’s necessary for entering a 1098-T.
• Where to go next: Review IRS Publication 970.
• Detailed information on state-specific education tax benefits or deductions.
• Where to go next: Check your state’s department of revenue website.
• How to handle complex scenarios like foreign educational institutions or tuition paid by a third party (e.g., employer).
• Where to go next: Consult a tax professional.
• The tax implications of student loan forgiveness or income-driven repayment plans.
• Where to go next: Research student loan programs or consult a financial advisor.
• Advanced tax strategies for minimizing overall tax liability beyond education credits.
• Where to go next: Explore general tax planning resources.