ROTC Stipend & Taxes

unkown1961

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I thought this had been addressed, but can't find a thread - are ROTC stipends taxed and are taxes withheld? Thanks.
 
  • Stipend (subsistence allowance) and book money is not taxed.
  • ROTC scholarship money that is applied toward tuition and fees is not taxed.
  • ROTC scholarship money that is applied toward room and board IS taxed
  • Pay for Summer Training (e.g Basic camp, Air Assault, CULP) IS taxed
Here is a good thread from the forum:
https://www.serviceacademyforums.com/index.php?threads/arotc-scholarship-and-taxes.46684/

Here is the IRS source:
Stipend: https://www.irs.gov/uac/special-tax-benefits-for-armed-forces-personnel
Scholarship: https://www.irs.gov/publications/p970/ch01.html
 
Last edited:
Thanks bfrat93 and AROTC-dad. I was wondering because my daughter is being asked to fill out a W4 in her papers (she'll be a freshman Type 1 AFROTC). We're trying to figure out withholdings.
 
The only withholding should be for scholarship monies put toward room and board. If it is all applied toward tuition, books, and fees, then you should have zero withholdings.
 
Also, any taxes owed for scholarships applied toward room and board MIGHT be offset by either of these tax credits: You can only use one, NOT BOTH.
  1. American Opportunity Tax Credit (available through 2017) allows up to $2,500 per student for four years of undergrad education BUT your modified adjusted gross income must not exceed $80K single or $160K Married filing jointly.
  2. The Lifetime Learning Credit - Allows up to $2,000 per year per tax return (not per student) for Undergrad or graduate degrees. However income restrictions are tougher. MAGI must be $55K or less for individual and $110K or less for married filing jointly.
For more info:
https://www.irs.gov/individuals/aotc
https://www.irs.gov/publications/p970/ch03.html

Disclosure: Not legal advice. I am a Certified Financial Planner(tm) but not a licensed tax preparer or attorney. See your licensed tax professional for specific advice.
 
Here's a link to an old tax related thread:

https://www.serviceacademyforums.com/index.php?threads/rotc-and-taxes.19341/

Essentially stipends, both substances and book allowances are tax exempt. As a cadet/midshipman, you will be taxed for pay from summer training (AF Field Training, Marine OCS, CULP, CLC, etc.).
They haven paid anyone going to AF Field Training in years. I think you have to be there for 30/31 days, dont quote me on this, but as the kids spend less than 20 days now, they dont get paid.
 
Also, any taxes owed for scholarships applied toward room and board MIGHT be offset by either of these tax credits: You can only use one, NOT BOTH.
  1. American Opportunity Tax Credit (available through 2017) allows up to $2,500 per student for four years of undergrad education BUT your modified adjusted gross income must not exceed $80K single or $160K Married filing jointly.
  2. The Lifetime Learning Credit - Allows up to $2,000 per year per tax return (not per student) for Undergrad or graduate degrees. However income restrictions are tougher. MAGI must be $55K or less for individual and $110K or less for married filing jointly.
For more info:
https://www.irs.gov/individuals/aotc
https://www.irs.gov/publications/p970/ch03.html

Disclosure: Not legal advice. I am a Certified Financial Planner(tm) but not a licensed tax preparer or attorney. See your licensed tax professional for specific advice.

Yeah, sorry AROTC-dad, room and board expenses are not qualified expenses for the American Opportunity Credit or Lifetime Learning Credit. I am a CPA who prepares personal taxes.
 
Yeah, sorry AROTC-dad, room and board expenses are not qualified expenses for the American Opportunity Credit or Lifetime Learning Credit. I am a CPA who prepares personal taxes.

Thanks for the clarification.
 
Yeah, sorry AROTC-dad, room and board expenses are not qualified expenses for the American Opportunity Credit or Lifetime Learning Credit. I am a CPA who prepares personal taxes.

Hopefully you’re still on here and can answer this question. :) if scholarship money goes to tuition, but the school gives ROTC a $4k discount on room and board, do we have to claim the $4k as income?
 
Yeah, sorry AROTC-dad, room and board expenses are not qualified expenses for the American Opportunity Credit or Lifetime Learning Credit. I am a CPA who prepares personal taxes.

Hopefully you’re still on here and can answer this question. :) if scholarship money goes to tuition, but the school gives ROTC a $4k discount on room and board, do we have to claim the $4k as income?
Shouldnt be. If they normally charge 10K per year and decide to only charge you only 7K, then it is only a discount. If they give you 3K for tuition and you use it on room and board, then it is income
 
Shouldnt be. If they normally charge 10K per year and decide to only charge you only 7K, then it is only a discount. If they give you 3K for tuition and you use it on room and board, then it is income

Thank you!
 
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