<p>This is all so confusing! Ok, my son is using his dad's GI Bill benefits (which I know are not taxable)for school this year. In addition, he received $4000 in scholarships and he earned almost $2,000 in working wages. His 1098-T shows $10800 in in qualified tuition and related expenses in box 2, and his scholarships in box 5. Since the GI Bill covered his tuition, does that mean all his wages and scholarships are taxable since they were used for room and board, etc? Or are they not taxable because the GI Bill is not taxable and the amounts he received in wages and scholarships are less than the qualified expenses in box 2? </p>
<p>AGH! Any help would be greatly appreciated!</p>
<p>Sorry. Any scholarships not used for qualified tuition and fees will be taxable. Since the GI bill covers all the tuition, then all the scholarship money is used for other things. It will be added to his W-2 on his return. On the other hand. His scholarship is $4000 and his wages are almost $2000 which comes to $6000 and the standard deduction is $5700 which leaves just $300 taxable. Tax on that will be $30. Pretty good, I think.</p>
<p>Thanks! That’s the way I understood it as well, but someone told me that the GI Bill doesn’t count at all, since it isn’t taxable. Only problem is, the scholarships have technically paid his tuition since the GI Bill hasn’t paid yet for this semester!</p>