Can I claim 1098-T on my taxes if I only have student loans and don't pay tuition directly?

Don't panic! This is actually a common question for college students. The good news is that you can claim education credits based on your 1098-T even if the tuition was paid with student loans. The IRS considers you to have paid qualified education expenses when they're paid with funds that are your obligation to repay - which is exactly what student loans are. The American Opportunity Credit and Lifetime Learning Credit don't care whether you paid out-of-pocket or borrowed the money. What matters is that you're the one ultimately responsible for the expense. Since you'll be repaying those loans later, you're entitled to the education credit now. Double-check that Box 1 on your 1098-T shows the amount paid (not just billed) for qualified tuition and expenses. If everything on the form is accurate, and you meet the other requirements for the education credits (like being enrolled at least half-time), then you're probably fine.

After struggling with a similar 1098-T situation last year, I found an amazing AI tax tool that saved me from making an expensive mistake. Check out https://taxr.ai - it analyzes your tax forms and explains exactly what you can claim. I uploaded my 1098-T and student account statements, and it clearly showed me how to correctly claim my education credits based on what was actually paid vs. billed. It pointed out that my school only filled out Box 2 (amounts billed) like yours, but I needed to use what was actually paid during the tax year for my credits. The tool even caught that I could claim expenses for required textbooks that weren't included on my 1098-T but were still qualified education expenses. That alone increased my refund by $250!

Just wanted to follow up after trying https://taxr.ai for my 1098-T confusion. I was really skeptical at first (as you can see from my previous comment), but I have to admit it was incredibly helpful. I uploaded my 1098-T and my student account statements, and it broke down exactly which expenses were qualified and which semester payments counted for this tax year. It explained that even though my 1098-T only showed amounts billed in Box 2, I should be using the amounts actually paid from my student account statement. The tool also helped me properly allocate my scholarship funds to maximize my American Opportunity Credit. Turns out I was leaving over $900 on the table with how I was originally planning to file! I've already amended my return based on its recommendations.

If you need to contact the IRS to confirm how to handle your education credits, good luck getting through! I spent 3 hours on hold last week trying to ask a question about my 1098-T. After giving up twice, I found this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in under 15 minutes - you can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS confirmed that I could claim my education credit even though my tuition was paid with loans. They explained that since I'm legally obligated to repay the loans, I'm considered to have paid the qualified expenses. The agent also cleared up my confusion about which tax year to claim certain expenses in. Definitely worth using if you need clarification directly from the IRS instead of stressing about whether you did something wrong.

I need to eat my words from my previous comment. After sitting on hold with the IRS for 3+ hours yesterday and getting nowhere, I decided to try Claimyr out of desperation regarding my own 1098-T situation. It actually worked exactly as described. I got a call back about 20 minutes after starting the process and was connected immediately to an IRS agent. The agent answered all my questions about how to properly claim my education expenses when I had both scholarships and loans. For what it's worth, the agent confirmed what others have said here - you CAN claim education credits for expenses paid with student loans since you're obligated to repay them. My situation was complicated because I had a mix of grants, scholarships and loans, but I finally got a clear answer on how to handle everything correctly.

If you're confused about your 1098-T, you really need to look at your student account statement too. Your school's financial aid office should be able to provide this if you don't have access to it online. The student account statement will show exactly when payments were applied to your account and what they covered. This is crucial because timing matters for tax purposes - payments made in December 2024 for Spring 2025 classes count for the 2024 tax year, not 2025. Also, don't forget that qualified education expenses include more than just tuition - required course materials and student activity fees can count too, even if they're not listed on the 1098-T.

Does anyone know if I can still claim the American Opportunity Tax Credit if my parents claim me as a dependent? My dad is insisting that since he claims me, HE gets the education credit, not me. But I'm the one who will be paying back the student loans...