NO. The confusion you are running into concerns the fact that some tax-free assistance may be claimed as income so that the education expense might be used to apply for an education credit. Funds from a Veterans Affairs program cannot be used this way. In other words, if the VA pays a students tuition, that tuition cannot be used to claim an education credit.
VA payments are never taxable, including payments you used for room and board.
According to the IRS:
“Veterans' Benefits
Payments you receive for education, training, or subsistence
under any law administered by the Department of Veterans Affairs (VA) are tax
free. Don't include these payments as income on your federal tax return.
If you qualify for one or more of the education tax
bene-fits discussed in chapters 2 through 12, you may have to reduce the amount
of education expenses qualifying for a specific tax 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.
You may want to visit the Veterans Administration web-site at
for specific information about the various VA benefits
for education.
www.gibill.va.gov
Example.
You have returned to college and are
receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly
basic housing allowance (BHA) that is directly deposited to your checking
account, and (2) $3,840 paid directly to your college for tuition. Neither of
these benefits is taxable and you don't report them on your tax return. You also
want to claim an American opportunity credit on your return. Your total tuition
charges are $5,000. To figure the amount of credit, you must first subtract the
$3,840 from your qualified education expenses because this payment under the GI
Bill was required to be used for education expenses. You
don't
subtract
any amount of the BHA because it was paid to you and its use wasn't restricted.”
For more information, click the link below:
CLICK
HERE for IRS Pub 970 Education Credits
