[Does anyone know if USAFA provides info like what is provided in the USMA links? Some good info and I'd love to have something like this to take to our tax advisor.
Yes, USAFA provides similar information. I haven't looked at in in some time, but I think it is in the parent handbook or maybe it's just information provided to the cadets. I believe the amount they say they provide that first year (or approximate half-year) is $21,000.[/QUOTE]
Sorry to necro-post, but the USMA letter is just not that useful. It may very well be the IRS position, but its overly simplistic.
At least a couple tax account friends believe it should be challenged. IRS says its not a scholarship relationship. That means the cadets are employees of the Army. If the funny money compensation is counted as income, then the lodging, uniform expense, etc should be deductible since its mandated by the employer.
So if its not a school/scholarship situation, then its an employer relationship. IRS can't pick the worst of both.
If it were treated properly the net cadet refund would be far higher. But you'd still not be able to deduct your dependent except for potentially the year they report.
Bother anyone the cadets are being over taxed?
That said, it was not worth our effort to challenge.