Veteran Benefits: Are G.I. Bill Education Benefits Taxable?
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Collapse ▲Happy Armed Forces Day to all those who currently serve in the military! We greatly appreciate your service and hope that our work in extension honors your commitment to the nation.
As I have done in the past on various holidays, I am writing a holiday-themed article. Importantly, this article applies equally to veterans as well as families of the fallen – it’s simply being posted on Armed Forces Day because the inspiration for this article came back in January and Armed Forces Day was the nearest, widely-celebrated military-themed holiday.
As a new professor creating a tax course as I teach it (usually only staying a lecture or two ahead of my own students), I have the privilege of receiving questions that frankly I had not thought of when developing the course content. During a recent lecture in which I discussed how educational scholarships are often taxable as income, I was asked by one of my students if education benefits under the G.I. Bill were taxable as income.
Like my mentors had trained me to do, I responded that I was not sure but I would look it up by next class. I suspect those receiving G.I. Bill education benefits at some point may have had the same question, so I decided to draft a short article about it.
So, are education benefit payments from the G.I. Bill taxable?
No, payments from any G.I. Bill programs are not taxed – and this statement goes for the active-duty soldier/sailor/Marine/airman/guardsmen/guardian, their dependents, and their survivors. These tax-free benefits include:
- Tuition
- Training fees
- Test fees for licenses and/or certifications
- Money to pay for a tutor
- Work study
- Books
- Housing
What if the benefits are used for my dependents or survivors?
The benefits are tax-free regardless of who they are used for.
Should I include the benefit payments anywhere on my tax forms?
No, taxpayers are asked to refrain from including those benefit payments on their tax forms (since the benefit is not taxable in the first place).
Is there any required action to receive the exclusion of G.I. Bill benefits from taxes?
No, there is no required action.
Will the education benefit payments affect my tax credit?
If the tax credits that the taxpayer seeks to claim are based on education expense, yes. In that case, the taxpayer will need to subtract the education benefit payments from total education expenses. Importantly, the taxpayer should only subtract the education benefits that they receive (i.e., and not subtract the benefits paid directly to the college).