Tax breaks for college students: the forms and records to collect before filing

College costs reach the return through a few doors. Two are credits for tuition, one is a deduction for loan interest, and one is a rule that keeps some scholarship money tax-free. The table shows each one for 2025 with the form that proves it.

Only one person can use a student’s costs. If a parent claims you as a dependent, the parent takes the credit, and you cannot (IRS Publication 970). Any tuition you paid yourself then counts as paid by the parent (IRS Publication 970). Settle who claims you before either return is filed.

The American opportunity credit is the credit for the first four years of college, and it is the larger one. The student must be enrolled at least half-time in a degree program, and the credit can be claimed for only 4 tax years (IRS Publication 970). A felony drug conviction rules it out (IRS Publication 970).

The lifetime learning credit is the fallback for everyone else. It covers graduate school and courses taken to gain or improve job skills, with no limit on the number of years (IRS Publication 970). The student does not have to be in a degree program, and a drug conviction does not bar it (IRS Publication 970).

For 2025, both credits phase out at the same income: they stop at $90,000 of MAGI, or $180,000 on a joint return (IRS Publication 970). To check how many years the larger credit has been used, bring the past returns that included Form 8863.

An ID rule tightens for 2026. From that year, either credit needs a Social Security number, of the kind issued for work, for the filer and for the student, and an ITIN no longer works (26 U.S.C. 25A). The American opportunity credit also needs the school’s EIN (26 U.S.C. 25A). You will find it as the filer’s TIN on Form 1098-T.

Schools file Form 1098-T for each enrolled student with a reportable payment (About Form 1098-T). Box 1 shows payments the school received in the year, and Box 5 shows scholarships and grants. The difference is the starting point, not the answer.

The form often differs from your own records. Tuition paid in December for a term that starts in January to March can count in the year you paid it (IRS Publication 970). A refund or a late grant can show up on next year’s form instead. So ask for the student account statement from the bursar, with each charge, payment and payment date.

Books and supplies count for the American opportunity credit even if you did not buy them from the school (IRS Publication 970). Keep the receipts, because they are not on Form 1098-T. Room and board, travel and research costs never count for the credits (IRS Publication 970).

A scholarship is tax-free only if you are a degree candidate and it pays for qualified costs such as tuition and required fees (IRS Publication 970). The part used for room and board is taxable income. So is pay for teaching or research the grant requires of you (IRS Publication 970). Keep each award letter, since it shows what the money was for.

A 529 withdrawal comes with Form 1099-Q, and it can cover room and board for a student enrolled at least half-time (IRS Publication 970). You can take a credit in the same year as a tax-free 529 withdrawal, as long as the same costs are not used for both (IRS Publication 970). Sort the costs so each payment backs only one break.

A part-time or work-study job gives you a Form W-2, and gig work may come with Form 1099-NEC. You may need to file even with small income, and filing is the only way to get back tax that was withheld. A dependent student is a student a parent can claim, and their own return must say so.

Student loan interest is deductible even if you do not itemize (IRS Publication 970). For 2025 the deduction phases out between $85,000 and $100,000 of MAGI, or $170,000 to $200,000 on a joint return (IRS Publication 970). Each servicer sends Form 1098-E with the interest paid.

Parents with more than one child in school can find the dependent rules in the dependents checklist. The Form 1098-T guide shows each box in more detail.

Students tend to file late in the season, when the school forms are already buried in an inbox. Most of the work is matching three sources: the school’s form, the bursar statement and your own receipts. Doing it in a fixed order keeps a payment from being counted twice.

The steps below work for a student filing alone and for a parent who claims the student. Do them in the same sitting, such as one weekend in February, with every form open.

1. Agree with your parents on who claims you this year.
2. Download Form 1098-T and the bursar statement for each school.
3. Total tuition and required fees paid in the calendar year, then subtract tax-free grants.
4. Add receipts for required books and supplies bought anywhere.
5. Set aside the costs paid with a tax-free college savings plan withdrawal.
6. Pick the credit that fits, and bring Form 1098-E for loan interest.

• IRS Publication 970: For 2025: credit amounts, eligibility tests, MAGI limits of $90,000 and $180,000, prepaid terms, course materials, tax-free scholarship rules, 529 room and board, and the student loan interest phase-out.
• 26 U.S.C. 25A: For tax years after 2025 (P.L. 119-21 sec. 70606), no education credit is allowed unless the return includes the SSN (as defined in section 24(h)(7)) of the filer and of the student; the American Opportunity Tax Credit also needs the institution EIN.
• About Form 1098-T: Eligible educational institutions file Form 1098-T for each enrolled student with a reportable transaction.
• IRS, education credits FAQ: The eligible student is you, your spouse or a dependent you claim, and you cannot claim the credit if you are listed as a dependent on another return.