VA education benefits taxable?

[BlueThorness]

My daughter is in college and receives what is known as CSDDV, from the Florida VA.  It covers her college tuition.  I had been told, in a previous forum, like this, that VA benefits are not considered taxable, but I'm pretty sure when the university provided the1098-T form that showed her scholarships, grants and college expenses, they included this amount.  Because of this, it showed that she received more income than her college expenses and it went from her receiving a refund to owing.  Should this have happened?  Should the CSDDV been excluded from from the scholarships and grants?

Additionally, in a separate place on her tax form, it asked if she receives VA benefits not listed anywhere else.  She also receives Chapter 35 VA benefits from the national VA, which she listed in this section.  Should she have?  Did this potentially impact her receiving a return vs. owing?

[DaveF1006 · Accepted solution]

All VA benefits should be tax free regardless how they were issued. I would exclude the amount paid from CSDDV as taxable income on he return.  If this amount is a part of a larger amount that is reported as scholarship income, you need to find out what this amount is and exclude it from your taxable income. Here is how to exclude if you verified this amount is reported as a larger amount.

1. Go to Wages & Income
2. Scroll all the way down to Less Common Income
3. Select Miscellaneous Income, 1099-A, 1099-C from the drop-down
4. Select Other reportable income
5. Any Other Taxable Income? = Yes
6. Description = CSDDV VA benefit income reported as Scholarship money on a 1098T
7. Now represent the CSDDV VA amount  as a negative number by placing a minus sign in front of the total.

As far as asking if she receives other VA benefits, you may have her change the answer and say she didn't receive any VA benefits.  Then you could see if this impacts her return.  It shouldn't.

[BlueThorness]

Since she has already filed and included these, can she file an amended return and possibly get some of what she paid back?

[MaryK4]

Yes, she can file an amended tax return to correct the entry and get a refund.  See How to File an Amended Tax Return with the IRS - TurboTax.   @BlueThorness