Form 1098-T can be used to claim education tax credits for an unlimited number of years. While the American Opportunity Credit (AOTC) is limited to four years of undergraduate study, the Lifetime Learning Credit (LLC) allows for an unlimited number of claims for undergraduate, graduate, or professional degree courses, including for job skill improvement.
Lifetime Learning Credit (1098-T)
There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the Hope or American opportunity credit and lifetime learning credits for the same student in one year.
There is no limit on the number of years you can claim the credit.
Where can I find out how many years of the American Opportunity Credit I have claimed? If you have copies of your prior year tax returns, you can check them to see how many times you claimed the credit.
A Form 1098-T provides information to the IRS and you about tuition payments, helping you claim potential education tax credits like the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit (LLC) to reduce your tax bill or increase your refund, but scholarships/grants (Box 5) can reduce the amount of expenses eligible for credits, and if scholarships exceed expenses, that excess might be taxable income. You'll use figures from the form (like payments in Box 1 and scholarships in Box 5) along with your own records to complete IRS Form 8863 to claim these benefits, but remember, it's not all expenses that count (e.g., room/board don't).
You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
A "$4,000 education credit" likely refers to either the American Opportunity Tax Credit (AOTC), where $4,000 in expenses yields a max $2,500 credit (100% of first $2k + 25% of next $2k), or the Tuition and Fees Deduction, which allowed reducing taxable income by up to $4,000 (for tax years through 2020/2021). The AOTC is a credit (dollar-for-dollar reduction) and generally better, while the Tuition & Fees Deduction reduced income, but you couldn't take both for the same student, with income limits applying to both.
Form 1098-T is a form provided to you and the IRS by an eligible educational institution that reports, among other things, amounts paid for qualified tuition and related expenses. It may be useful in calculating the amount of the allowable education tax credits.
To get the full $2,500 American Opportunity Tax Credit (AOTC), you need at least $4,000 in qualified education expenses (like tuition, fees, books, supplies) for an eligible student in their first four years of college, with a Modified Adjusted Gross Income (MAGI) under $80k (single) or $160k (joint), and you must claim it on Form 8863. The credit covers 100% of the first $2,000 and 25% of the next $2,000 spent, and up to 40% ($1,000) can be refunded even if you owe no tax.
A 1098-T form isn't a specific dollar amount but a statement from your school showing amounts paid for qualified education expenses, like tuition, that helps you or your parents claim education tax credits, such as the American Opportunity Tax Credit (AOTC) (up to $2,500) or the Lifetime Learning Credit (LLC) (up to $2,000) to reduce your federal taxes. The form shows payments received (Box 1) and scholarships/grants (Box 5) for a calendar year, excluding non-qualified costs like room, board, and insurance.
The Lifetime Learning Credit equals 20% of qualified expenses paid, up to a maximum of $10,000 of qualified expenses per return. Therefore, the maximum Lifetime Learning Credit you can claim on your return for the year is $2,000, regardless of the number of students for whom you are claiming the credit.
While not an "audit", it does mean that they will ask some people to validate the numbers they used. The IRS is using Form 1098T as the start of these reviews. That does not mean you should only use Form 1098T. Ultimately you are responsible for what's in your tax return.
A recent tax law ("One Big Beautiful Bill") introduced a new $6,000 bonus deduction for Americans aged 65 and older, available for tax years 2025-2028, reducing taxable income, not the tax itself, with income phase-outs starting at $75,000 MAGI for singles and $150,000 for joint filers. This deduction adds to existing standard deductions, provides up to $12,000 for couples, and requires a Social Security number and filing status other than Married Filing Separately.
If you have an amount showing in Box 4 of your 1098-T, it may reduce your allowable education tax credit claimed for the prior year. That, in turn, may result in an increased tax liability for the current tax year.
The "$1000 instant tax deduction" refers to a proposed Australian tax policy, specifically from the Albanese Labor government in 2025, allowing eligible workers to claim a flat $1,000 deduction for work-related expenses without needing receipts, simplifying tax returns for those with lower expenses but potentially costing those with higher expenses, starting from 1 July 2026. It's an option to replace itemised work-related deductions, not an extra refund, and doesn't affect non-work-related deductions like charity.
Tuition and Student Activity Fees which are typically Box 1 or Box 2 of the Form 1098-T. Expenses for course related books, supplies and equipment ONLY if the fees and expenses must be paid as a condition of enrollment or attendance.
Your child tax credit is likely $500 instead of $2,000 because they either turned 17 during the tax year, making them eligible for the Other Dependent Credit, or you might have mistakenly checked a box in your tax software, like saying their SSN isn't valid for employment or that they paid over half their own support, which triggers the lower credit amount, according to TurboTax support, TurboTax support, TurboTax support, and TurboTax support https://ttlc.intuit.index.php/community/taxes/discussion/my-daughter-is-17-but-is-still-jr-in-high-school-why-do-i-only-get-500-for-her-and-not-the-full-2000/00/3423950.
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