27d • 💼 Tax Industry Talk
📚 Tax Pros: 1098-T Reminder for Clients
A client receiving a 1098-T does not automatically mean they qualify for the American Opportunity Tax Credit (AOTC) or the full amount.
✅ AOTC is up to $2,500, but the full credit generally requires $4,000 of qualified education expenses paid out-of-pocket. Scholarships and grants can reduce qualified expenses and lower or eliminate the credit.
💡 Some clients qualify for part, some for none. Income limits apply too.
👉 Best practice: Collect the 1098-T (and supporting payment/expense documentation) and determine eligibility based on the full fact pattern.
📌 Quick Box Tip:
If Box 5 ≥ Box 1, it often indicates scholarships/grants covered most/all tuition, which can reduce or eliminate AOTC eligibility in many cases, but it doesn’t automatically disqualify the student.
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📚 Tax Pros: 1098-T Reminder for Clients
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