I received benefits from the Department of Rehabilitation’s Vocational Rehab program where they pay my school expense. How do I reduce this since it’s non-taxable income?

[masonfisher21-ic]

The Mississippi Department of Rehabilitation Services program paid for my tuition, rent, food, and toiletries. I was told this is nontaxable income by them, so would I just need to subtract their tuition payments to the school since they paid directly to me as an off campus student? How would I go about this on my tax return?

[AmyC]

The federal taxes the room and board portion of the payment so they were correct to tell you to subtract the tuition expenses. If you received a 1098-T, the program will do the work using boxes 1 and 5 to determine the taxable amount. You will enter the room and board portion of the scholarship funds during the questions.

If you do not have a 1098-T, you will need to enter the taxable portion.  Scholarship income entry

1. Go to the federal income section
2. Scroll to the bottom
3. Miscellaneous Income, 1099-A, 1099-C, Start
4. Other income not already reported on a W2 or 1099, Start
5. Other wages? Yes
6. Household employee? Continue
7. Sick pay, continue, Medicaid, continue
8. Other Earned Income? Select Yes, continue
9. Source of income? Select Other
10. Enter description - Scholarship, enter your taxable amount
11. Continue

 

[masonfisher21-ic]

@AmyC the program in its entirety is non-taxable, no room and board is included because I did not stay on campus. Does this mean I just need to deduct the tuition/book fees since they covered those?

[AmyC]

Ok, understanding now. If this is a VA program, then it is all tax free. If you have a tax form 1098-T, you would not need to enter the form. 

If you have another form, you can enter the form and then subtract out the income under Other Income. 

First enter the income:
1. go to the federal income section
2. scroll to the bottom
3. Miscellaneous Income, 1099-A, 1099-C, Start
4. Scroll to the bottom
5. Other reportable income, Start
6. Other taxable income?
7. Select YES
8. Description 
9. Amount, enter your amount as a negative
10. Continue