How to handle 1098-T form when Box 6 shows up this year?

Thanks for explaining! So if Box 6 shows $750, does that mean my wife actually received $750 less in scholarships last year than what was reported on last year's 1098-T? And if so, does that mean we potentially overpaid taxes last year by reporting too much scholarship income?

Yes, typically a positive amount in Box 6 means the school is reducing the prior year's scholarship amount by that figure. So if Box 6 shows $750, it generally indicates that $750 of what was reported as a scholarship/grant last year is being "taken back" or adjusted downward. If you reported the higher scholarship amount as income last year, you may have indeed overpaid taxes. You have options: you could file an amended return (Form 1040-X) for the previous tax year to claim a refund for any overpayment, or in some cases, you might be able to make an adjustment on this year's return. The approach depends on your specific situation and the materiality of the amount.

Did you actually have to speak with someone at taxr.ai or was it all automated? I'm dealing with a Box 6 situation too but I'm nervous about trusting an AI system with something tax-related that seems kind of complicated.

I'm curious - did they explain WHY the school made the adjustment in Box 6? My daughter's form has a similar situation and we have no idea why her university suddenly decided to adjust last year's numbers.

It was completely automated - I just uploaded my forms and the system analyzed everything. No need to schedule a call or anything. The analysis was super detailed though, with explanations about which tax rules applied to my specific situation. It felt more thorough than when I asked a human tax preparer about it. As for why the adjustment was made, the system explained that in my case, the university had initially categorized part of my scholarship as qualified when it should have been unqualified, so they were correcting their reporting. It might be different in your daughter's case, but schools often make these adjustments when they've miscategorized funds or when a student's enrollment status changes retroactively.

Wait, you can actually get the IRS to call you back? How does that even work? I've always just suffered through the hold times or given up.

Sounds like a scam to me. Why would I pay for something to get the IRS to call me when I can just call them directly? Plus, how do you know you're actually getting connected to the real IRS and not some scammer pretending to be them?

It's a service that basically waits on hold for you and then calls you when an IRS agent picks up. You dial into their system, they verify the number you're calling, and then they wait on hold instead of you. When an agent answers, you get an immediate call connecting you to that agent. I was skeptical too! But it's legit - they don't ask for any personal information beyond your phone number to call you back. They're just holding your place in the queue. And when you answer, you're connected directly to the IRS's official phone system - you can tell because it's the same automated system you hear when you call directly.

Great point! I actually did this for my daughter and they were super helpful. They printed out a detailed breakdown of all her financial aid by semester and explained exactly why they had to make the adjustment. Saved me a lot of guesswork.

That's good to hear! Financial aid offices deal with these forms all the time, so they're usually pretty good at explaining what each box means. One thing I learned is that different schools handle these adjustments differently, so it's always worth checking with your specific school. Sometimes they can even provide documentation that explains the adjustment, which is helpful if you need to file an amended return or if you get questions from the IRS later.

Thanks for mentioning this! We filed last year's return in February, so it sounds like we have plenty of time to figure this out. Would you recommend filing the amendment before working on this year's taxes, or should we finish this year's taxes first and then go back to amend last year's?

I'd generally recommend completing your current year's taxes first, then circling back to the amendment. This way you have a clear picture of your current situation before making changes to past returns. Just make sure to keep good notes about what you need to amend while it's fresh in your mind. Write down the exact adjustment needed and set a reminder to come back to it after tax season. Many people intend to file amendments but forget about it once the immediate tax deadline passes.