Military W2 Student Loan Repayment

[DZ Tax Advisors]

I have a military W2 with ONLY Box 2 and Box 17 filled out with numbers. My client said it was related to the reserves Student Loan Repayment, which the military paid directly to the student loan servicer.  She was not in a combat zone. 

I entered in Box 1 a $0 for Turbo Tax to not error out. Will the IRS take a $0 in box 1 for e-filing purposes? 

Publication 3 has this under Gross Income section:

• Student loan repayment from programs, such as the Department of Defense Educational Loan Repayment Program, to the extent that qualified higher education expenses exceed $5,250 annually

The payment did not exceed the $5,250 annually, would that indicate this is non-taxable event and any withholdings in box 2 and 17 refundable? 

 Since this W2 has no other numbers, is it even correct? 

Right now the whole amount is being refunded.

Thanks

[DMarkM1]

The W2 does not appear to be correct.  Under IRC 127 the exclusion of educational benefits up to $5250 annually are not to be included in gross income.  That means it will not be subject to income tax, therefore zero withholding.  There cannot be withholding on zero income. 

A zero income W2 cannot be e-filed. 

The payer should be contacted to find out what was the nature of the payment and determine if in fact there was withholding.    

[Hal_Al]

The W-2 does not appear to be correct. Payments made under the LRP are considered taxable income in the year(s) that payments are made, even if less than $5250.   There should be an amount on boxes 1 and 16. It is correct that a separate W-2 is issued for the payments.  

References: https://myarmybenefits.us.army.mil/Benefit-Library/Federal-Benefits/College-Loan-Repayment-Program-(...

https://www.forgetstudentloandebt.com/student-loan-relief-programs/federal-student-loan-relief/feder...