ROTC Stipend & Taxes

Discussion in 'ROTC' started by unkown1961, Jul 24, 2017.

  1. unkown1961

    unkown1961 Member

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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.
     
  2. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    • 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: Jul 24, 2017
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  3. bfrat93

    bfrat93 5-Year Member

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  4. unkown1961

    unkown1961 Member

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    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.
     
  5. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    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.
     
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  6. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    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.
     
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  7. Humey

    Humey Member

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    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.
     
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  8. roguemom35

    roguemom35 Member

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    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.
     
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  9. roguemom35

    roguemom35 Member

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    bfrat93, because of your meme, curious if you are at Penn State now, my son is an incoming freshman engineering student and will be NROTC?
     
  10. AROTC-dad

    AROTC-dad Moderator 5-Year Member

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    Thanks for the clarification.
     
  11. Momof3kids

    Momof3kids Member

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    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?
     
  12. Humey

    Humey Member

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    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
     
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  13. Momof3kids

    Momof3kids Member

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    Thank you!