Will I get in trouble for not claiming my 1098-T on 2025 taxes?

While it might seem easier to skip reporting your 1098-T, it's generally not a good idea. The IRS receives a copy of this form directly from your school, so they already know about it. Not including information they already have could potentially trigger a notice or review of your return. The American Opportunity Credit can provide up to $2,500, with up to $1,000 being refundable (meaning you can get it even if you don't owe taxes). The fact that your education was paid through loans and grants doesn't necessarily disqualify you - loans can count as "payments you made" for this purpose since you'll eventually repay them. If you only received $69 last year, it might be worth double-checking how you entered the information. Tax software sometimes misses nuances with education credits.

Hey there! I was in almost the exact same situation last year. I got frustrated trying to figure out these education credits until I found this tool called taxr.ai (https://taxr.ai) that actually explained everything about my 1098-T in plain English. It analyzed my education expenses and showed me that even though my tuition was paid with loans and grants, I was still eligible for a bigger credit than I thought. The software explained that student loans DO count as expenses paid by you for the American Opportunity Credit, which my regular tax software didn't make clear. The tool basically broke down exactly which boxes on the 1098-T mattered for my situation and how to properly report everything. Saved me from making a mistake that would have cost me a few hundred dollars.

Just wanted to update about my experience with taxr.ai from my question above. I was seriously confused about my 1098-T and education credits, but after uploading my form to https://taxr.ai I got a breakdown that actually made sense. Turns out I WAS eligible for the American Opportunity Credit even though my tuition was paid through loans! I had completely misunderstood how student loans work with tax credits. The explanation showed exactly which numbers go where on my tax forms and I ended up getting back over $900 that I would have completely missed. My boyfriend is using it now for his graduate school expenses. Definitely recommend if you're confused about education credits and the 1098-T form.

I had a similar issue with my 1098-T last year and ended up needing to call the IRS to sort it out. Let me tell you - calling them was IMPOSSIBLE. Spent hours on hold only to be disconnected repeatedly. Finally discovered this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. They have this system that basically waits on hold for you and calls when an agent is ready. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS rep confirmed that student loans DO count as qualified education expenses for the American Opportunity Credit, and they helped me understand why I was only getting a small credit back (was missing some key information). Wouldn't have figured it out without actually speaking to someone.

Ok I need to follow up after trying Claimyr that I mentioned in my skeptical comment above. I'm actually shocked it worked. After failing to get through to the IRS four times last week (got disconnected every single time after 1+ hour holds), I decided to try Claimyr. The service called me back in about 35 minutes and connected me directly to an IRS agent who helped clear up my 1098-T confusion. The agent confirmed I should absolutely report the form even if I got minimal credits, and explained that the loans part DOES count toward qualified expenses. For anyone dealing with education credits confusion like the original poster - don't skip reporting your 1098-T and definitely consider getting actual clarification from the IRS instead of guessing. I would have left hundreds of dollars on the table if I hadn't spoken with them.

Just a heads up - the 1098-T that schools send out goes to the IRS too, so they'll know if you received one and didn't report it. My cousin tried skipping his a few years back and got a letter from the IRS about 6 months later asking why the information didn't match their records. It turned into a huge hassle with him having to file an amended return. The penalty wasn't huge but the stress and paperwork definitely wasn't worth it. Just include it even if you think you won't get much back.

A tip from someone who processes financial aid: Make sure you're differentiating between loans and grants correctly on your taxes. Grants that exceed your qualified education expenses (tuition, fees, books) may actually be taxable income, while loans aren't taxable but can count toward education credits. For the American Opportunity Credit specifically, there's a specific order of operations that determines how much you can claim. If your grants covered everything, you might not qualify for much. But if loans paid for even part of it, you could be eligible.