1089-T. Tuition paid in 2024 for Spring 2025. Is tax on scholarships owed?

[JFelagund]

I have read several similar questions on this forum and elsewhere, but I haven't found quite a clear answer.

I am married filing jointly. My spouse, who will not be able to claim the AOTX because of claiming it 4 times before, paid tuition for Spring 2025 in December 2024. She received scholarships for that semester in January. And so, on this years 1089-T, Box 1 = $0, and Box 5 = $$$.
All the scholarships were used for tuition.
Are those scholarships taxable because tuition was paid in 2024 rather than 2025, and scholarships were received in 2025?

Or would it be okay because it is allocable to this academic period?
If that is not taxable, which I am very much hoping, ... do I even need to submit the 1098-T? If I were to submit it, could I adjust it by adding the Spring 2025 tuition into the "Amount I actually paid" box?

If it helps, she did not claim the AOTX in 2024 either.
Thanks for your help.

[Bsch4477]

The 1098-T is an informational document. If the scholarship amount was equal or less than the tuition paid (even though in 2024) you can ignore the form. 

[Hal_Al]

Q. If that is not taxable, and we are not claiming a tuition credit, do I even need to submit the 1098-T?

A. No. You do not need to enter it in TurboTax (TT).  

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly you have taxable scholarship income.  If neither is the case, and you enter it in TT, TT will make no entries on any actual tax forms.  So, just don't enter it. The interview is complicated and mistakes are possible. 

If you claim a tuition credit, you do need to report that you got one.

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2025 expenses".

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.

If she has already claimed the AOTC 4 times, she may still be eligible for the less generous Lifetime Learning Credit (LLC), which is 20% of tuition paid (up to $10K) and is non refundable (it can only be used to reduce your tax liability).  You may want to look at amending your 2024 return to claim it. There's even a loop hole available to claim the credit, if you are on scholarship.  But, that's not as lucrative with the LLC, as it is for the AOTC. 

[JFelagund]

Awesome @Hal_Al and @Bsch4477 thanks to you both.
I have one follow up, this time for myself. My tuition for Spring 2026 was billed (before scholarships) in December 2025 (I am graduation this year). But then my scholarships applied in January to cover it. So, I expect to have the same scenario next year filing my 2026 tax return. 

Summary if I just used the 1098-T:

Tuition Billed    |  Scholarship Received/Semester Applied

Dec  2024     |  Jan 2025

Aug 2025     |  Aug 2025

Dec 2025     |  Jan 2026

I would like to claim the AOTC this year since I still can (I plan on using the "taking as income" trick). I was a possible to be claimed as a dependent last year but wasn't so it wasn't claimed for me. Mathematically though, it is most important for me not to pay taxes on scholarships for next year. 

If I input the 1098-T as is, I'll have the mismatched semesters. I'll have scholarships for Spring 2025 and Fall 2025 matched with payments for Fall 2026 and Spring 2026.

Options to correct.

1. Shift scholarships backwards to match semesters.

2. Shift payments forward to match semesters. 

3. Do nothing (mismatched)

I believe that option 2 is correct. because I did not "pay" for my tuition until I actually received the scholarship; The balance was just sitting in my account. That would be according to my own records of when it way paid in this year, which is important.
So then I could simply correct the 1098-T (box 1 and box 5) with the scholarships received in 2025 alongside the expenses that were covered by them (billed earlier) also in 2025?

And then next year, I could report the tuition for Spring 2026 (billed in 2025) and the scholarship for Spring 2026 and potentially claim AOTC as well with the loophole? And, I would not be paying taxes on that?

Thanks again.

[Hal_Al]

In order to claim the AOTC, tuition must have been paid in that year.  So, if the 2026 scholarship was credited to your account in 2026, tuition was paid in 2026. So you can claim the credit for 2026. But since the scholarship money was the only payments in 2026, you will have to declare $4000 ($2000 if you're willing to accept a $2000 credit instead of $2500) of the scholarship as taxable income.