Help understanding 1098-T with prior year adjustment - Box 4 and Box 6 questions

I'm super confused about a 1098-T I just got for 2023, especially since I didn't even go to school or pay any tuition last year! Looking at this form and it's showing Box 1 (expenses) with $660 and Box 5 (scholarships) has $1100. Then I noticed Box 4 and Box 6 have similar amounts ($600 in expenses and $1000 in scholarships). I know that when Box 5 is higher than Box 1, I'm supposed to report the difference as income on my taxes (the scholarship overage). But now I'm completely lost with these Box 4 and Box 6 amounts. Does this mean I have to go back and amend my 2022 return and then also adjust my 2023 taxes to show a decrease in one year and increase in another?? I tried calling the school's financial aid office to get some clarity, but the person I spoke with wasn't very helpful. They started explaining something about the boxes but then I got disconnected. Anyone dealt with this 1098-T prior year adjustment situation before? I'm worried I might be reporting income incorrectly!

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21 comments

Sara Unger

•8M

This is a textbook example of a prior year adjustment on a 1098-T. Here's what those boxes actually mean: Box 1 shows qualified expenses for 2023 ($660) Box 5 shows scholarships/grants for 2023 ($1100) Box 4 shows adjustments to expenses from a PRIOR year ($600) Box 6 shows adjustments to scholarships from a PRIOR year ($1000) What likely happened is your school made corrections to your 2022 amounts. Since Box 5 is higher than Box 1 by $440, that's technically taxable scholarship income for 2023. The prior year adjustments suggest they reduced both your 2022 expenses and scholarships. This does mean you should consider amending your 2022 return if the adjustment changes your taxable scholarship income significantly from what you reported. For 2023, you'd report the current $440 overage as income.

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Sara Unger

•8M

You're exactly right! If your 2022 scholarships were reduced by $1000 and your qualified expenses were only reduced by $600, that means your taxable scholarship income for 2022 would decrease by $400. So you would have potentially overpaid taxes in 2022. For 2023, you have the current $440 taxable amount from Box 5 minus Box 1. These adjustments essentially shifted some of your tax liability from 2022 to 2023, but the net effect might be close to the same. The question is whether it's worth amending for the difference.

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Freya Ross

•8M

I went through something similar last year with my 1098-T having those adjustment boxes filled in. After hours of frustration trying to figure it out myself, I used https://taxr.ai to analyze all my tax documents. Their AI scanned my 1098-T and explained exactly what these prior year adjustments meant for my specific situation and whether I needed to file an amended return. What was helpful is that it showed me the exact forms I needed to file for both years and calculated if the amendment would actually result in a meaningful refund after considering the filing fees. The tool saved me from making an expensive mistake since in my case it wasn't worth amending.

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Freya Ross

•8M

I only had to upload the 1098-T forms from both years along with my tax return summary pages. The tool identified the specific changes needed without requiring every document. It specifically looked at the education credits and scholarship income sections that were affected. The accuracy was impressive actually. I had my uncle (who's been doing taxes for 20+ years) look over the results, and he confirmed the tool's assessment was correct. It was particularly good at determining if the change in tax liability crossed the threshold where amending made financial sense, considering both federal and state implications of the education credit changes.

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Sergio Neal

•8M

Just wanted to update about my experience with taxr.ai for my own 1098-T issue. I was skeptical in my earlier comment but decided to try it anyway. The tool immediately identified that my school had made adjustments that affected my American Opportunity Credit from the previous year. It showed me exactly how the Box 4 and Box 6 amounts changed my taxable scholarship income AND my education credits. In my case, I was actually owed a refund of $320 after amending. The tool generated a clear explanation document that I attached to my amended return to explain the changes. IRS processed it without any questions and I got the refund faster than expected. Definitely worth checking if your adjustment is significant enough to amend!

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Savanna Franklin

•8M

I had a similar issue with prior year adjustments on my 1098-T last year, and trying to get answers from my university's financial aid office was impossible. Called the IRS for clarification but couldn't get through after waiting for HOURS. That's when I found https://claimyr.com which got me connected to an actual IRS agent in about 20 minutes. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an agent picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent explained that prior year adjustments on 1098-Ts are common and walked me through exactly how to handle the amendments. Saved me so much stress and potentially an audit flag.

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Savanna Franklin

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It doesn't skip the line - it waits in the queue for you instead of you having to sit there listening to hold music. Their system basically calls the IRS, navigates all those annoying menu options, and then sits on hold in your place. When a human agent finally picks up, it connects the call to your phone. It's completely legit - they don't ask for any tax info or personal details beyond your phone number to call you back when an agent is reached. All the sensitive tax discussion happens directly between you and the IRS agent. I was skeptical too until I tried it and spoke directly with an IRS representative about my 1098-T adjustment questions.

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Amy Fleming

•8M

I owe everyone here an apology - I was the skeptic in the previous comments. After trying to reach the IRS for 3 days about my tax transcript (needed it to understand my own education credit situation), I broke down and tried that Claimyr service. Got connected to an IRS rep in about 35 minutes. The agent answered all my questions about how to handle 1098-T prior year adjustments and even pulled up my account to confirm I hadn't claimed the wrong amount of education credits in the previous year. Turns out I didn't need to amend after all in my specific case. The service actually does exactly what it claims - just holds your place in line and calls you when a human picks up. Saved me countless hours of frustration. Sometimes being proven wrong is a good thing!

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Alice Pierce

•8M

There's no hard official rule published by the IRS that says "don't amend for less than $100." However, in practice, IRS representatives often advise this threshold based on internal guidelines. The IRS has limited resources for processing amended returns. The official stance is that you're required to correct any errors on your return regardless of amount. But pragmatically, they focus enforcement resources on more significant discrepancies. When I worked as a tax preparer, we generally advised clients that amendments for less than $100 in tax difference weren't worth the filing fees and potential complications unless there were other factors involved.

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Ivanna St. Pierre

•8M

Yes, that's exactly right. The AOTC gives you a credit of 100% of the first $2,000 in qualified expenses, and 25% of the next $2,000. So depending on your original expenses, a $600 reduction could change your credit by anywhere from $150 to $600. For example, if you originally had $4,000 in expenses, you would have qualified for the full $2,500 AOTC. But if that's reduced to $3,400, your credit would drop to $2,350 ($2,000 + 25% of $1,400). That's a $150 difference which would definitely warrant amending your return.

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