How to Use Form 1098-T to Claim Education Tax Credits

Every January, colleges send out Form 1098-T (Tuition Statement) by mail or through the student portal. For many Korean American families, this form ends up in a drawer — which means leaving real money on the table. The 1098-T is your key document for claiming federal education tax credits, and it's worth paying attention to.

Two Credits You Should Know About

The IRS offers two main education tax credits tied to the 1098-T:

• American Opportunity Tax Credit (AOTC): Up to $2,500 per year for the first four years of undergraduate study. Up to $1,000 is refundable, meaning you can get it back even if you owe no tax. Income limit: $80,000 (single) / $160,000 (married filing jointly), with a phase-out above those thresholds. The student must be enrolled at least half-time.
• Lifetime Learning Credit (LLC): Up to $2,000 per year, covering undergrad, grad school, and vocational training. Non-refundable. Same income limits as AOTC.

You can't claim both credits in the same tax year for the same student. If your child is in their first four years of college, the AOTC is almost always the better deal.

How to Actually File and What to Watch For

When your 1098-T arrives, focus on Box 1 (tuition and fees paid) and Box 5 (scholarships and grants received). Your eligible expense is generally Box 1 minus Box 5. To claim the credit, complete IRS Form 8863 and attach it to your Form 1040. Tax software like TurboTax or H&R Block will walk you through it once you enter your 1098-T figures. One important note for the Korean community: F-1 and J-1 visa holders classified as nonresident aliens are generally not eligible for these credits. Whether you qualify as a resident alien depends on the Substantial Presence Test — so check your status carefully before filing. Also, make sure to opt into electronic delivery through your school's portal (MyUCLA, Wolverine Access, etc.) so the form doesn't get lost in the mail.

Eligibility depends on your visa status, income, and enrollment details, which vary for every family. We strongly recommend consulting a licensed CPA or tax professional to make sure you're filing correctly and getting every credit you're entitled to.