Q. So should I just select 'No' from the beginning for this section since she has no other scholarships that were not already reported previously?
A. Yes, That is, do not duplicate the entries of educational assistance amounts. If the GI bill $ are already include in box 5 of the 1098-T, do not enter it again at 'Did XXXX receive a scholarship or grant in 2021' section also?
Q. In the section 'Did XXXX pay for room and board with a scholarship or grant', I put 0 since we can apply it to the 529 which is tax deductible. In reality the money could come from any one of the sources to include the VA GI Bill.
A. Yes, that's the correct thing to do.
There are three things you can do with your Qualified educational expenses (QEE):
- Allocate then to scholarships (so that the scholarship remains tax free)
- Use them to claim an education credit
- Allocate them to the 529 distribution (1099-Q) so that it will not all be taxable
Sometimes you want to make some of the scholarship taxable, so you can use the money for the other 2 tax benefits. That's when you would say some of the scholarship was used for R&B. That does not appear to be your case. You do not have that flexibility with GI Bill tuition money.
