Shocked by unexpected 1098-T for grad student stipend

This is actually a pretty common situation with graduate stipends. Universities sometimes change how they report these payments, but it doesn't necessarily mean anything has changed tax-wise for your daughter. There are several important things to understand here: The 1098-T primarily reports qualified tuition and related expenses, along with scholarships and grants. A stipend is technically compensation for services (teaching or research) and is treated differently than scholarships/grants that directly pay for tuition. If your daughter has been reporting her stipend as income all along, she's likely been doing it correctly. What likely happened is that the university changed their internal classification of her funding. Sometimes as students progress through MD/PhD programs, the source of their funding shifts between departments or funding agencies, which can affect how it's reported on tax forms. The most important thing is to check whether the stipend is now being reported in Box 5 of the 1098-T (Scholarships or Grants) or if she received a separate W-2 or 1099 for it. This will determine how it should be handled on her tax return.

I went through something similar with my taxes last year and discovered taxr.ai (https://taxr.ai) which literally saved me from a huge headache with my grad school stipend situation. I was confused because my university suddenly changed how they reported my fellowship on my tax forms after 3 years of consistency. The taxr.ai tool analyzed all my tax documents including the 1098-T and explained exactly how my stipend should be reported based on whether it was for teaching services or pure research. It was super helpful because it identified that part of my funding had shifted from being service-based (taxable) to a pure fellowship (potentially tax-free depending on how it was used).

Just wanted to follow up - I decided to try taxr.ai after my initial skepticism and wow, it actually worked amazingly well for my complicated MD/PhD situation! It correctly identified that my stipend had changed from a research grant to a teaching stipend midway through the year, which explained why my university suddenly started reporting it differently. The tool gave me step-by-step instructions on how to report each portion correctly. Ended up saving about $2,300 that I would have overpaid if I'd just blindly followed what my tax software suggested. The analysis even included references to the specific IRS publications that applied to my situation so I could double-check everything.

If your daughter needs to get clarification directly from the IRS about how to handle this changed reporting on her 1098-T, good luck getting through to them on the phone. I spent 4 hours on hold last week trying to get an answer about my own grad school tax situation. Then I found Claimyr (https://claimyr.com) which was a total game-changer. They had an IRS agent actually call ME back within 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent was able to explain exactly why my university had changed their reporting method and confirmed that I hadn't done anything wrong in previous years.

I have to eat my words and apologize to profile 9. After seeing their response, I decided to give Claimyr a shot because I was desperate to talk to someone at the IRS about my graduate stipend tax situation. I literally got a call connecting me to an IRS agent in about 30 minutes. The agent explained that the change in my 1098-T reporting was due to a new interpretation of reporting guidelines that many universities implemented this year, and confirmed I hadn't been doing anything wrong in previous years. They even helped me understand exactly how to report my stipend correctly on this year's return with the new 1098-T format. Never been so happy to be wrong about something!

Just wanted to add that this exact same thing happened to my son who's in a PhD program. The university financial aid office explained that they recently updated their accounting systems and now classify certain types of stipends differently for reporting purposes. But they confirmed it doesn't change the actual tax treatment - if the stipend was for services rendered (teaching or research work), it's still taxable income regardless of how it appears on the 1098-T. If your daughter has been reporting it correctly all along, she should be fine.

Has your daughter checked with other students in her program? I'm betting they all got the same change on their 1098-Ts this year. Universities sometimes make these reporting changes across the board due to updated interpretations of IRS guidelines or changes in their financial systems. My school did something similar last year and it freaked everyone out, but it turned out to be a non-issue tax-wise.