TrophyHusband 0 #1 February 4, 2008 while filling out our taxes on turbo tax, one field asks for va education benefits (gi bill). when we enter it in, our refund is reduced by $600. I found the law here: http://www.irs.gov/pub/irs-pdf/p970.pdf but i'm still a little unclear about what to do. what makes me believe that i don't have to claim it is this: "Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA)are tax free. Do not include these payments as income on your federal tax return." If you qualify for one or more of the education benefits discussed in Chapters 2 through 12*, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. This applies only to the part of your VA payments that is required to be used for education expenses." specifically the last statement. as far as i know, none of my gi bill has to be used to tuition. if your tuition is very cheap, free, someone pays it for you, you have a grant, loan, or scholarship, it doesn't matter. as long as you are taking the credits, you get the check. my interpretation is then that i don't have to report it. my concern is that we get back $6000 to $9000 back a year and we could be flagged for an audit. i'm sure that the "my interpretation" wouldn't hold up if an auditor interprets it different. is there anyone i can call to get a ruling on this without paying someone? "Your scrotum is quite nice" - Skymama www.kjandmegan.com Quote Share this post Link to post Share on other sites
warpedskydiver 0 #2 February 4, 2008 Do not enter it as it is not a taxed item. The person who wrote the turbo tax software does not neccessarily know the law. Quote Share this post Link to post Share on other sites
BillyVance 35 #3 February 4, 2008 Quote The person who wrote the turbo tax software does not neccessarily know the law. And sometimes the law changes after the tax software version was released, though I'm not saying this was the case here. The IRS may have the info on their website that could clear the confusion up."Mediocre people don't like high achievers, and high achievers don't like mediocre people." - SIX TIME National Champion coach Nick Saban Quote Share this post Link to post Share on other sites
TrophyHusband 0 #4 February 4, 2008 it isn't a taxed item, however what is happening is that when i enter it my 1600 tuition moves from the deduction column to the taxable income column. the kick in the nuts is that it puts us into a higher tax bracket, causing a $1600 increase in income to give us a $600 increase in taxes. according to what i quoted in the original post, i have to reduce my tuition that i claim by the amount that i recieved in va education benefits, but "This applies only to the part of your VA payments that is required to be used for education expenses." the big question is then, what part, if any, of my va benefits are required to be used for education expenses. i just talked to the va, and they said that the gi bill is used to support me while i'm going to college, they don't care what i use it for. i just can't find that in writing. i was just hoping that someone here had some expertise in this area, or had been there before. "Your scrotum is quite nice" - Skymama www.kjandmegan.com Quote Share this post Link to post Share on other sites
TrophyHusband 0 #5 February 4, 2008 the government clear something up? why didn't i think of that? the link i gave is the irs rules, its just that i need to know what the irs interpretation of the rule is. when its all said and done, the va doesn't report it to the irs, so i'm probably ok not reporting it, but it still makes me nervous. "Your scrotum is quite nice" - Skymama www.kjandmegan.com Quote Share this post Link to post Share on other sites
BillyVance 35 #6 February 4, 2008 Quote the government clear something up? why didn't i think of that? the link i gave is the irs rules, its just that i need to know what the irs interpretation of the rule is. when its all said and done, the va doesn't report it to the irs, so i'm probably ok not reporting it, but it still makes me nervous. D'oh... I missed the link. If you don't get anything out of us fucktards, I guess my best bet is ask a tax expert at your local HR Block or other accountant office.... "Mediocre people don't like high achievers, and high achievers don't like mediocre people." - SIX TIME National Champion coach Nick Saban Quote Share this post Link to post Share on other sites
DrewEckhardt 0 #7 February 4, 2008 Quote my concern is that we get back $6000 to $9000 back a year and we could be flagged for an audit. i'm sure that the "my interpretation" wouldn't hold up if an auditor interprets it different. If you're getting back that much you'd be a few hundred dollars better off each year if you filled out a W4 claiming the correct number of exemptions, put the difference between your old and new take-home pay in a decent savings account (Countrywide is still paying 5%), and didn't withdraw it until the next tax year. Quote is there anyone i can call to get a ruling on this without paying someone? The IRS has a toll-free tax question number. Quote Share this post Link to post Share on other sites
TrophyHusband 0 #8 February 4, 2008 here's the deal with the w-4. we are claiming the correct number of dependants, but we get two special pays throughout the year that account for 30-40% of our pay in lump sums. when we get these lump sums, a shitload of taxes come out. we would be a lot better off if we didn't pay taxes on the monthly salary and just payed taxes on the lump sums, but i don't think we can do that. "Your scrotum is quite nice" - Skymama www.kjandmegan.com Quote Share this post Link to post Share on other sites
