My son is in college and gets a indiana child of a disabled veterens scholarship , is this taxable on the state level
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My son is in college and gets a indiana child of a disabled veterens scholarship , is this taxable on the state level

My son is going to school on a Indiana Child of a disabled Veteran scholarship we are doing his taxes and Turbo tax stated he owes 408.00 ? how can this be when we thought it was non-taxable ?

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Intuit Alumni

My son is in college and gets a indiana child of a disabled veterens scholarship , is this taxable on the state level

The scholarship should not be taxable. Subtract the scholarship from the education expenses. This is done when you enter the 1098-T and answer the interview questions on YOUR TurboTax return (if you claim the student). 

Don't enter the 1098-T on his return if he is a dependent.

Thank you for your service. 

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 https://benefits.va.gov/gibill/  for specific information about the various VA benefits for education.

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.”

https://ttlc.intuit.com/replies/4194409


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