Do I Owe Taxes on the GI Bill?
If you plan to go to college using GI Bill benefits, you might wonder if the GI Bill is taxable. Examining the tax implications of your student financial aid is essential, especially if you hope to claim federal tax credits for your education expenses. The article below is not tax advice; consider this a primer for your own tax research or when discussing your VA benefits with a tax professional.
Free Military Tax Filing Help Is Available
Military members, family members, and veterans may have free help during tax season. If you aren’t sure how to prepare and file your own taxes you may consider using a free resource such as MilTax, offered to qualifying service members and family members. MilTax provides one-on-one assistance from MilTax experts who have training for military-specific tax issues.
RELATED: Free Tax Support for Military Members
Federal Income Tax Rules for GI Bill Benefits
The Department of Veterans Affairs official site reminds us that payments you get from any GI Bill program is exempt from federal taxes. That does not mean you won’t file additional paperwork if you get GI Bill benefits (see below) but you are not taxed on them.
RELATED: Student Loans for Military Spouses
A Short List of VA Tax-Free Education Benefits
- Tuition
- Housing stipend
- Fees
- Test fees for licenses and certifications
- Tutoring
- Work-study
- Books
Tax-Free VA Education Benefit Programs
- GI Bill
- Fry Scholarship
- VET TEC Training
- Yellow Ribbon Program
- National Call To Service Program
- Survivors’ and Dependents’ Educational Assistance (DEA) program
Read more: Military and Veteran College Scholarships and Grants
Federal Income Tax Credits And Your VA Education Benefits
Federal income tax credits may be offered based on your education expenses. To claim these credits, subtract VA education benefit payments from your total education expenses (money paid directly to you, not to the school.) The amount the VA pays to the school is what you may claim as deductions.
Learn More About IRS federal income tax rules governing VA benefits and how receiving them may affect your federal tax credits.
RELATED:
- Student Loan Tax Deduction: Everything You Need to Know
- GI Bill for Guard and Reserve
- When Does the GI Bill Expire?
About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.