What is the purpose of Form 1098-T?

Form 1098-T is used by eligible educational institutions to report payments received for qualified tuition and related expenses from students. This form helps institutions provide essential information for tax purposes, as it is integral for students or their guardians when claiming education-related tax benefits, such as the American Opportunity Tax Credit or the Lifetime Learning Credit.

The form includes details like the amount of qualified tuition and fees, scholarships, and grants, all of which can affect the taxpayer's eligibility for education credits. Therefore, the purpose of Form 1098-T is specifically aligned with reporting tuition payments rather than any other type of income or payment, which is why this answer is accurate and relevant within the context of tax preparation and education-related deductions.