<p>Even at KP the government provides room, board, tuition, etc., and are not considered as scholarships. This has a value that can be obtained from the Treasurers Dept. at USMMA. The $30k that was mentioned earlier is an arbitrary number, although it is close to what the value is for USMA. You will not find your answer in the IRS publications.</p>
<p>FYI. This was provided to Cadet Candidates at USMAPS this year. Hope this helps to answer your questions. Similar guidance should be available from KP.</p>
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<p>SUBJECT: Income Tax Information
1. Many of you as cadet candidates have questions concerning the income tax consequences of cadet pay and allowances. This memo provides information from the standpoint of both your tax return and your parents return for 2005. It is very important that you share this data with your parents.
2. This memo is based on the tax laws and current rulings of treasury
officials. It is, however, informative only and does not necessarily reflect the
official position of the Internal Revenue Service or the Department of the
Army.
3. All cadets at the Prep School must file their own income tax returns as even the least paid candidate earned over $5,000 from the Army. Each cadet candidate who entered the Prep School on 15 July 2005, and remained through 31 December 2005, has received or had credited to their account during 2005 base pay of $6432.54 for Invitational Reservistsother candidates who have prior service may have earned more. Cadets must report this amount as income from the Army.
4. Your parent(s)/guardian(s) must have contributed more than half of your
support for the year in order to claim you as an income tax exemption More
than half the support refers to dollar value, and not to the length of time
support was furnished. Your parent or guardian may properly include the cost of board, clothing, lodging, medical and dental care, education, property
and furniture, insurance, etc., they furnished you when they calculated their level of support. If you lived at home during the first six months of 2005,
your parent or guardian may include a proportionate amount of the family food bill, utilities, rent or house payments, interest, taxes, etc., as part of
your support. If you attended college, prep school, or high school prior to
entering the Prep School, your parents may also include the amount they paid for tuition, books, school supplies, and transportation to and from school as parental support.
5. In determining the value of support furnished from sources other than
your parents, you must include both taxed and untaxed support amounts. This simply means that the portion of your taxable pay spent on your own support must be included, and in addition, the support provided by the Army in the form of food, lodging, education and other services must also be included. Even though the value of Army support is not taxed as income, the value must be considered when determining who provided more than half of your support. The following chart indicates values of support furnished by yourself and by the Army.
Candidate Pay earned from 15 July through 31 December
$6,432.54 (for IRs)
Subsistence (food) (76 days x $6.35 per day)
15 July through 30 September 494.00
(92 days x $6.50 per day)
1 October through 31 December 598.00
Room and Board (Half year per USMAPS FY04
Cost of Education Report) 1,480.50
Education (the actual 2005 tuition cost per semester
at the USMAPS) 19,654.80
TOTAL SUPPORT BY THE CADET AND BY THE ARMY $28,659.84
6. In our opinion, if your parent has not provided at least $28,659.84 in
support, then your parent may not be able to claim you as an exemption. If
your parent has provided more than this amount in support, then your parent
is entitled to claim you as an exemption. Under IRS regulations, if your parent can claim you, you cannot claim a personal exemption for yourself, and you will have to complete a worksheet to compute your standard deduction.
7. The question may arise whether an appointment to the Military Academy
can be considered a scholarship award within the meaning of the income tax laws. The Internal Revenue Service has ruled that such an appointment is not a scholarship award and that the education provided by the Military Academy must, therefore, be included as an item of support furnished by the Army.
8. I trust that the information provided, although necessarily general in
nature, will be of assistance to you and your family. The above information is provided to ensure that you and your parent(s)/guardian(s) have sufficient
data to calculate income tax returns.
9. Any questions by your parent(s)/guardian(s) concerning the proper
methods of calculating dependency should be resolved through independent legal counsel, Publication 17, and/or contact the Internal Revenue Service.</p>