Need help figuring out Box 4 on my 1098-T form for 2025 taxes

You're not overthinking this at all! The 1098-T can be super confusing, especially when you have adjustments from prior years. In your situation, since you didn't claim any education credits in 2024, option #1 is correct - the Box 4 amount doesn't affect your 2025 taxes. Box 4 is primarily important for people who need to recalculate education credits from prior years. What does matter is correctly calculating your taxable scholarship amount for 2025. You're on the right track with Box 5 - Box 1 = $6.5k as your taxable scholarship income. The Box 4 amount has nothing to do with this calculation since it's already reflected in what the school reported in Box 1 (which shows amounts billed in current year). The most important thing is to report that $6.5k as income on your 2025 return. You'll include it as "Scholarships and grants" on Schedule 1 with "SCH" written next to it.

I had a similar situation last year with my 1098-T and found this awesome service called taxr.ai (https://taxr.ai) that really helped me figure it out. I was totally confused about how to handle some scholarship money and they analyzed my forms and gave me step-by-step instructions. You just upload your 1098-T and they'll break down exactly what you need to do with each box, including that tricky Box 4 situation. They explained that for people who didn't claim education credits (like you and me), Box 4 doesn't impact your current year taxes - their explanation matched what the first commenter said. The analysis was super clear and they even explained how the boxes relate to each other. Saved me a ton of time googling and stressing!

Wanted to follow up - I decided to give taxr.ai a try with my complicated financial aid situation (had multiple 1098-Ts and some weird scholarship distributions). Honestly I was skeptical but wow it was actually super helpful! The breakdown they gave me explained exactly what I needed to do with each amount and even explained WHY certain scholarships were taxable while others weren't. What I really appreciated was how they flagged a potential issue with my previous year's reporting that could have caused problems. Now I have a clear plan for this year's taxes and I'm way more confident. Definitely worth checking out if you're dealing with education tax forms!

Had the exact same problem last year trying to figure out my 1098-T. Spent HOURS on hold with the IRS trying to get someone to explain it. Total nightmare. Eventually found Claimyr (https://claimyr.com) which got me connected to an actual IRS rep in about 20 minutes instead of waiting forever. The IRS agent explained that since I hadn't claimed education credits, the Box 4 amount didn't affect my taxes at all. Apparently Box 4 only matters if you need to recalculate education credits from prior years. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Claimyr basically calls the IRS for you and navigates their phone tree, then calls you when they have an agent on the line. Saved me literal hours of frustrating hold music. The IRS rep was actually super helpful once I finally got to talk to one.

Coming back to admit I was completely wrong about Claimyr. After struggling for another week trying to get through to the IRS about my refund status, I decided to try it out of desperation. I was absolutely shocked when they called me back in less than 30 minutes with an actual IRS agent on the line. The agent was able to tell me exactly what was happening with my refund (there was a minor issue they needed to verify) and gave me a timeline for when it would be resolved. If you're dealing with 1098-T questions like the original poster, definitely worth using this to speak directly with the IRS instead of trying to interpret the forms yourself. Completely changed my view on how to deal with tax issues!

Just an FYI - I'm pretty sure you're calculating your taxable scholarship amount correctly. Box 5 - Box 1 = taxable portion that exceeds qualified education expenses. Remember that you need to report this amount under "Other Income" on your tax return with a note that it's from scholarships. I think the current instructions say to write "SCH" next to it. Make sure you're not double counting that Box 4 amount anywhere. Since it's just an adjustment to a prior year and you didn't claim education credits, it doesn't actually factor into your tax calculations for either year.

Wait I'm really confused about something similar. My 1098-T has numbers in box 4 AND box 6. What do I do with box 6?? The box 4 is like $2000 and box 6 is $500. Does this mean I owe money??

Just went through this with my kid's 1098-T. Box 4 is super confusing but here's the simple version: If you DIDN'T claim education credits in the previous year: - Box 4 doesn't affect anything. You can ignore it. If you DID claim education credits in the previous year: - You need to recalculate those credits with the reduced expense amount - May need to file an amended return (Form 1040-X) Since you didn't claim credits, you're in the clear! Just make sure you're correctly reporting your taxable scholarship amount (Box 5 - Box 1) as income on your current return.

This is a great explanation thread! I went through something very similar last year and wanted to add one small clarification that helped me understand Box 4 better. The key thing to remember is that Box 4 represents money that was *returned to you* for expenses from a prior year. So in your case, you paid tuition out of pocket in Fall 2024, then got financial aid that covered those same expenses, so the school refunded your payment in 2025. This is different from just getting a regular financial aid disbursement - it's specifically a refund of money you previously paid. That's why it shows up in Box 4 instead of affecting your current year's Box 1 or Box 5 amounts. Since you correctly didn't claim education credits in 2024 (which makes sense if your scholarships exceeded your qualified expenses anyway), this refund doesn't create any tax consequences for you. You just report your 2025 taxable scholarship amount normally. One thing that might help for future reference - if you expect to get additional financial aid after paying tuition, you might want to wait to pay until the aid is finalized to avoid these kinds of adjustments. But obviously that's not always possible with payment deadlines!