Stipend Question

K

Kanogo

NROTC MIDN & USNA Appointee (declined)
Joined
May 4, 2021
Messages
32
Is the monthly NROTC Schooarship stipend considered taxable?
 
Yes, it’s considered regular income.

DS files a tax return every year, but because of total income and tax withholding, he does get most of the taxed amount back.
 
MidCakePa said:
Yes, it’s considered regular income.

DS files a tax return every year, but because of total income and tax withholding, he does get most of the taxed amount back.
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@MidCakePa , Thank you for the response. I’m asking because I want to open a ROTH IRA
 
MidCakePa said:
Yes, it’s considered regular income.

DS files a tax return every year, but because of total income and tax withholding, he does get most of the taxed amount back.
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Hi, Does the scholarship (tuition) also counts as income? Thank you.
 
Uhoh - I may have four years of 'splainin to do if the ROTC monthly stipends are indeed taxable. These being the 250-500.00 or so per month stipends some receive during the months of the school year only.

My understanding is that the scholarship moneys used for tuition, fees, book allowance are not taxable. My understanding was that the monthly stipend is not taxable per the internet which had guided "Depending on the military service program and your college year, the ROTC living-expense stipend ranges from $300 to $500 per month. The IRS says these subsistence payments are tax-exempt and need not be reported on the student's tax return."
Tax moneys used for room and board are taxable. Moneys from duty pay are taxed. "The ROTC program requires that students participate in weekend military exercises and summer advanced training camps. Students receive active-duty military pay for these activities. This is taxable income that must be reported on the student's tax return. A student who received tuition, books and fees on an ROTC scholarship, plus $3,000 for monthly stipends and $600 in military pay during the year would include only $600 in his gross income."

Hope that helps y'all.
 
This has been answered before on the boards (you can Google it), but stipends are tax-free. As support, the U of Tennessee ARTOC page has the info: "Scholarship awardees also receive a book allowance and a monthly tax-free stipend to defray the cost of living." As such, I don't think stipends can be included in a ROTH calculation. You can always invest them in a S&P 500 mutual fund.
Plus, the stipends won't take your student to the minimum level of income required to file taxes (if they aren't working other jobs).
 
Herman_Snerd said:
Uhoh - I may have four years of 'splainin to do if the ROTC monthly stipends are indeed taxable. These being the 250-500.00 or so per month stipends some receive during the months of the school year only.

My understanding is that the scholarship moneys used for tuition, fees, book allowance are not taxable. My understanding was that the monthly stipend is not taxable per the internet which had guided "Depending on the military service program and your college year, the ROTC living-expense stipend ranges from $300 to $500 per month. The IRS says these subsistence payments are tax-exempt and need not be reported on the student's tax return."
Tax moneys used for room and board are taxable. Moneys from duty pay are taxed. "The ROTC program requires that students participate in weekend military exercises and summer advanced training camps. Students receive active-duty military pay for these activities. This is taxable income that must be reported on the student's tax return. A student who received tuition, books and fees on an ROTC scholarship, plus $3,000 for monthly stipends and $600 in military pay during the year would include only $600 in his gross income."

Hope that helps y'all.
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To be clear, if ROTC scholarship money is used for Tuition/Fees it is not taxable, but if we take Room/Board instead, it is taxable? For son only $500 difference so looks like we are better just having money paid toward tuition. Did I understand it correctly?
 
TiredMom said:
To be clear, if ROTC scholarship money is used for Tuition/Fees it is not taxable, but if we take Room/Board instead, it is taxable? For son only $500 difference so looks like we are better just having money paid toward tuition. Did I understand it correctly?
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I'll also state I'm not a tax pro but I'll share my understanding and used the info below for the last 4 years of filing.... at a university you may have: tuition, fees, room, board, book fees (and others like flight fees for pilots, but let's table that for now).
If you use your ROTC scholarship toward tuition/ fees it is not taxable.
If you use your ROTC scholarship toward room and board (or more commonly if you use Merit scholarships you received say from the university toward room and board since your tuition and fees, books were covered by the ROTC scholarship) that is taxable. Yes you can opt to use your scholarship instead toward room and board - Your accountant or Turbotax will ask you - how much of this was used for room and board, and that is taxable.
Keep in mind most college students have minimal other income so typically the tax on the room/ board use of scholarships isn't too bad. Of course mine went off and worked a bunch of other jobs so we'll pay more in taxes - but overall still not bad.
The stipends that monthly typically provide 200-500 per month when school is in session, depending on year and service, per the nice post above and also my understanding are not taxable.
 
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When my Mids ask questions on stipends, I first refer them to the university webpage that lays out taxable income. For us that site is here: https://taxdepartment.gwu.edu/taxat... are paid through,withhold tax on the payment.

Their NROTC tuition and some fees are paid by the Navy to the university and are almost always non-taxable income for the student. That's because the scholarship is for a service rendered by the university (college education).

The stipends are paid to the students and as far as I know, there are no restrictions on what that stipend can be used for. It could be books, metro pass, food, etc. The question would come to how to prove the stipend went for books if audited. What's the chance of a College student being audited? Probably slim to none. But like all things, wouldn't hurt to take the receipts and other paperwork to a tax professional for a one time sanity check.
 
Herman_Snerd said:
Uhoh - I may have four years of 'splainin to do if the ROTC monthly stipends are indeed taxable. These being the 250-500.00 or so per month stipends some receive during the months of the school year only.

My understanding is that the scholarship moneys used for tuition, fees, book allowance are not taxable. My understanding was that the monthly stipend is not taxable per the internet which had guided "Depending on the military service program and your college year, the ROTC living-expense stipend ranges from $300 to $500 per month. The IRS says these subsistence payments are tax-exempt and need not be reported on the student's tax return."
Tax moneys used for room and board are taxable. Moneys from duty pay are taxed. "The ROTC program requires that students participate in weekend military exercises and summer advanced training camps. Students receive active-duty military pay for these activities. This is taxable income that must be reported on the student's tax return. A student who received tuition, books and fees on an ROTC scholarship, plus $3,000 for monthly stipends and $600 in military pay during the year would include only $600 in his gross income."

Hope that helps y'all.
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This is also my understanding based on the research I’ve done.
 
FVNY said:
Hi, Does the scholarship (tuition) also counts as income? Thank you.
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If the scholarship money goes towards tuition it is not taxable. If it goes towards room and board it is taxable. This is true for any scholarship regardless of source.
 
We just had DS's buddy visit back from college. He's an AROTC sophomore and his stipend is $420 per month. Why is my DS's stipend (MO NROTC) so much lower at $250 per month (he'll be a freshman next fall)? Seems out of whack.
 
JohnMcLane said:
Why is my DS's stipend (MO NROTC) so much lower at $250 per month (he'll be a freshman next fall)? Seems out of whack.
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Rest assured, it comes with all-you-can-eat Crayons! 🤣🤔🤗

DD, a Marine 2LT, says the Corps seems to never get all the cool, shiny things the other branches get. Yes, said I, but the Corps does have the best uniforms. And that counts for something. 😉
 
MidCakePa said:
Rest assured, it comes with all-you-can-eat Crayons! 🤣🤔🤗

DD, a Marine 2LT, says the Corps seems to never get all the cool, shiny things the other branches get. Yes, said I, but the Corps does have the best uniforms. And that counts for something. 😉
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How funny! And true!
 
Kanogo said:
Is the monthly NROTC Schooarship stipend considered taxable?
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According to IRS Publication 3 for military information, stipends are not considered taxable income. (Taxable income received, such as Duty Pay, should be shown on something like a W-2 or Form 1099.)

Quoted from IRS:

"Items in Table 2 aren't includible in your gross income though you may have to report them on your income tax return.....
.....Table 2. Servicemembers’ Government Pay Items Excluded From Gross Income.....
.....• ROTC educational and subsistence allowances....."

Publication 3 (2022), Armed Forces' Tax Guide | Internal Revenue Service

www.irs.gov www.irs.gov
 
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