How to report 1098-T Box 6 adjustment impacting taxes for grad student funding?

I'm a full-time graduate student with full funding from my research advisor. For the past few years, my 1098-T forms have been straightforward (Box 1 roughly equaled Box 5, and Box 6 was always 0). This year, though nothing has changed with my funding situation, I'm seeing an additional $13,500 added to BOTH Box 5 and Box 6. This is causing me to suddenly owe a significant amount in taxes that I wasn't expecting. My university provided this explanation: "In most cases, Box 6 adjustments are the consequence of departments or the Financial Aid Office changing the source of aid from one internal account to another. When departments make this change, it creates a deficit from a prior year (Box 6) and this amount is then included in Box 5 along with the current year's aid." I don't understand how this makes sense. It seems like I'm being double-taxed just because my university moved money between internal accounts. There's a possibility my advisor changed my funding source within the past year or so, but the actual amount of funding stayed exactly the same. I have appointments scheduled with both my advisor and someone from university finance on Monday, but I'm completely stressed about this unexpected tax bill. Has anyone dealt with this 1098-T Box 6 situation before? Any insights would be incredibly helpful!

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18 comments

Amaya Watson

•8M

This is actually a common issue with 1098-T forms when universities reclassify funding sources. Here's what's happening: Box 5 shows scholarships/grants for the current year, while Box 6 shows adjustments to scholarships/grants from previous years. When your university moved money between accounts, they essentially "took back" funding from a previous tax year (that's the Box 6 amount) and then "gave" you that same amount again in the current year (included in Box 5). For tax purposes, you need to report both. The good news is that Box 6 amounts can often be offset against your Box 5 amounts when calculating your taxable scholarship income. You should calculate the difference between Box 5 and Box 6 to determine your net scholarship/grant amount for this year. When you meet with your university finance person, ask specifically about how this reclassification affects your taxable income and whether they can provide documentation explaining that this was just an internal accounting change rather than you receiving additional funds.

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Amaya Watson

•8M

Yes, that's generally correct. Your net scholarship amount would be the difference between Box 5 and Box 6, so $11,500 in your example. This amount would typically be reported on the "Other Income" line of your Form 1040 (Line 8z on the 2024 form) with a notation of "SCH" for scholarship. There's no specific form for this calculation, but you should keep documentation explaining the situation in case of questions from the IRS. Some tax software doesn't handle this situation automatically, so you may need to manually adjust the amounts.

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Giovanni Martello

•8M

I went through exactly this with my 1098-T last year and spent hours trying to fix it. After endless phone calls, I found https://taxr.ai which actually helped me resolve the whole mess. They specialize in tax form analysis and told me exactly how to handle this Box 6 situation. In my case, my university did the same thing - moved funds between accounts and suddenly I had a huge amount in Box 6. The taxr.ai system scanned my forms, explained what was happening in plain English, and guided me through the correct reporting steps. They even generated a letter explaining the situation that I could attach to my return in case of an audit.

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Giovanni Martello

•8M

You upload your tax forms and it uses AI to analyze them and explain what's happening in everyday language. It also guides you through reporting options based on your specific situation with the 1098-T. I tried getting a corrected form, but my university refused, saying the form was technically correct due to their internal fund transfers. The problem wasn't the form itself but understanding how to properly report it on my taxes. The university kept saying "consult a tax professional" but most tax pros I talked to weren't familiar with the nuances of Box 6 adjustments for graduate funding.

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Savannah Weiner

•8M

Just wanted to update that I tried taxr.ai after seeing the recommendation here, and it was incredibly helpful with my 1098-T Box 6 issue! The system immediately identified the problem and explained that this was just an accounting reclassification, not actual new income. It showed me exactly how to report the net amount (Box 5 minus Box 6) on my tax return and provided documentation explaining why this approach is correct according to IRS guidelines. I was able to avoid paying taxes on money I never actually received. They also have detailed explanations about the difference between qualified and non-qualified scholarship amounts which was super helpful for my situation. When I met with my university's finance person, I was actually more informed than they were about how to handle this tax situation properly!

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Libby Hassan

•8M

I had a similar nightmare with my 1098-T last year. After getting bounced between my department, financial aid, and the bursar's office for weeks, I found https://claimyr.com and used their service to get through to an actual IRS agent who could help. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that when Box 6 represents prior year adjustments due to internal account changes (not you actually receiving more money), you should only be taxed on the net amount. She walked me through exactly how to report it on my return and what documentation to keep. Saved me from overpaying by almost $3,000 in taxes! Getting through to a knowledgeable IRS agent made all the difference because they deal with these 1098-T issues regularly and can provide definitive guidance.

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Libby Hassan

•8M

They basically wait on hold with the IRS for you. Instead of you sitting on hold for hours, they have an automated system that does the waiting, and when they reach an actual IRS agent, they call you to connect you directly. It's that simple. Yes, it absolutely works. I was skeptical too, but after trying for 2 weeks to get through on my own with no success, Claimyr had me talking to an IRS agent within a couple hours of using their service. The agent I spoke with immediately understood my 1098-T Box 6 issue and explained exactly how to handle it.

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Sofia Peña

•8M

I can't believe I'm saying this, but I tried Claimyr after seeing it mentioned here, and it actually worked! After failing to get through to the IRS for weeks, Claimyr got me connected to an agent within an hour. The IRS agent I spoke with was incredibly helpful about my 1098-T Box 6 situation. She confirmed that when universities switch funding sources internally, the Box 6 adjustment shouldn't be treated as additional taxable income. She explained that I should report the net amount (Box 5 minus Box 6) on my tax return and keep documentation from my university explaining the reclassification. The agent also mentioned that this is a common issue they see with graduate students and that many people mistakenly overpay taxes because they don't understand how to handle Box 6 adjustments. Having an official explanation from the IRS gave me the confidence to file correctly and avoid paying taxes on "phantom income" I never actually received.

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Sophia Carter

•8M

I was able to get documentation! But I had to be persistent and specific in my request. I emailed the bursar's office, financial aid, AND my department chair, explaining that I needed written confirmation that the Box 6 amount represented an internal transfer of funds and not additional scholarship money provided to me. After about 3 follow-ups, the university financial services director finally sent me a letter stating that the Box 6 amount was "an administrative adjustment representing internal fund transfers between university accounts that does not constitute additional funds disbursed to the student." I attached this to my tax return along with a brief statement explaining why I was only reporting the net scholarship amount.

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Aaron Boston

•8M

Thank you! This is exactly what I needed to know. I'll draft a similar email today and start pressuring all three departments. I already tried just asking the bursar's office but they gave me a generic response that wasn't helpful at all. I'll be persistent and make sure to specifically request confirmation that it's an internal transfer, not additional scholarship money. Hopefully having something in writing will protect me if there are any questions about my return.

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Brandon Parker

•8M

I had the same issue with TurboTax! What worked for me was entering the full amounts in both Box 5 and Box 6 as requested, but then going to the "Other Income" section and making a negative adjustment labeled as "1098-T Box 6 adjustment for internal fund transfer" to offset the double counting. This way the correct net amount gets reported. If you use another tax software, the process might be different, but the principle is the same - you need to make a manual adjustment somewhere to ensure you're only taxed on the net scholarship amount.

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