GI Bill: Are my education benefits taxable?

Are my education benefits taxable?

No. Any veterans’ benefits paid under any law administered by the
Department of Veterans Affairs (VA) should not be reported as income to the
Internal Revenue Service (IRS).

Per IRS Publication 97

“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.

Chapters 2 through 12 are as follows:

2. Hope Credit

3. Lifetime Learning Credit

4. Student Loan Interest Deduction

5. Student Loan Cancellations and Repayment Assistance

6. Tuition and Fees Deduction

7. Coverdell Education Savings Account (ESA)

8. Qualified Tuition Program (QTP)

9. Education Exception to Additional Tax on Early IRA Distributions

10. Education Savings Bond Program

11. Employer-Provided Educational Assistance

12. Business Deduction for Work Related Education

Taken from IRS Publication 970

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