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Post 9/11 GI Bill Facts – Taxable Income, Kickers, etc.

Post 9/11 GI Bill Facts – Taxable Income, Kickers, etc.

Accurate Post 9/11 GI Bill facts can be hard to come by since the New GI Bill is an incredibly complicated piece of legislation, but we are here to help.

Below you’ll find 10 lesser-known facts about the Post 9/11 GI Bill. If we haven’t answered your questions, please feel free to sound off in the comments section at the bottom of the page.

1. The Post 9/11 GI Bill and Taxes

Similar to undergraduate student loans, Post 9/11 GI Bill benefits are not taxable. You do not have to report these benefits as taxable income. In fact, any veterans’ benefits paid under any law administered by the Department of Veterans Affairs (VA) should not be reported as income to the Internal Revenue Service (IRS). Make the most of your military education benefits by enrolling in an accredited online college from our article on how to find a military inclusive college!

If you have additional questions about the Post 9/11 GI Bill and taxes please post them in the comments section below.

2. The Post 9/11 GI Bill and “Break Pay”

The original Montgomery GI Bill included “break pay,” the ability to receive pay during “no class” increments 55 days or less. This was designed to give students continual financial support during lapses in their semesters, such as winter intersession/break.

However, students that are using the Post 9/11 GI Bill are required to remain in school year-round in order to gain year-round benefits. What does this mean? The Post 9/11 GI Bill does not offer Break Pay. Fortunately, most schools offer summer and winter intersession courses, though you will need to be enrolled in enough courses to be considered a “full-time student” to avoid losing your benefits during the intersession period.

Upcoming changes to the GI Bill will make it possible for exclusively online students to collect BAH pay!

3. The “Buy Up” Program and the Post 9/11 GI Bill

Students that elected to participate in the “Buy Up” program during the Post 9/11 GI Bill will not receive an increased amount ($600 buy-up) paid under chapters 30 or 1607. Furthermore, they will not be refunded this amount under the Post 9/11 GI Bill.

Read more about the “Buy Up” Program.

4. Refund of the Montgomery GI Bill Enrollment Fee with the Post 9/11 GI Bill

Students that were previously enrolled in the Montgomery GI Bill and have elected to switch to the Post 9/11 GI Bill will be refunded the $1200 Montgomery GI Bill enrollment fee. The specific way this works:

All Montgomery GI Bill (chapter 30) contributions, excluding $600 “Buy Up,” will be refunded at a proportional amount [based on the number of months remaining under MGIB at time of Post 9/11 GI Bill (chapter 33) election] of the basic $1200 contribution. This refund will be included in the last monthly payment when chapter 33 entitlement exhausts.

Individuals who do not exhaust entitlement under chapter 33 will not receive a refund.

5. Post 9/11 GI Bill and Tutorial Assistance

The Post 9/11 GI Bill offers up to $2,000 for a certification of licensing exam or work-study program, and $100 a month tutorial assistance benefit..

6. Eligibility for Post 9/11 GI Bill in Lieu of Montgomery GI Bill-Selected Reserve

This question was recently asked of us:

I have qualifying active duty service in a regular component after September 10, 2001. When I was discharged, I signed a 6-year contract as a member of the Selected Reserve. On August 1, 2009, I will be eligible for the Montgomery GI Bill and the Montgomery GI Bill-Selected Reserve. Can I elect the Post 9/11 GI Bill by giving up MGIB-SR instead of MGIB, even if I was never called-up for active duty from the Selected Reserve after September 10, 2001?

The answer to the question is as follows:

If you are eligible for MGIB and/or MGIB-SR on 8/1/2009, and you meet the eligibility requirements for the Post 9/11 GI Bill, you must trade in either MGIB or MGIB-SR to receive the Post 9/11 GI Bill benefits. You may trade in the MGIB-SR even if you were not called for active duty fro mthe Selected Reserver after 9/10/2001, and have no qualifying active duty associated with your Selected Reserve Service. If you trade in MGIB-SR to become eligible for the Post 9/11 GI Bill, you will retain eligibility to MGIB under the rules established in that program.

You cannot, however, receive benefits for more than one program at any given time, and you cannot receive more than a maximum of 48 months of benefits under any combination of VA benefit programs.

7. ROTC Grads and the Post 9/11 GI Bill

Graduates from a ROTC academy qualify for the Post 9/11 GI Bill. However, the time spent in the ROTC program does not count towards the time served requirements, so prospective students will have to sign an obligation of service document to receive their benefits.

8. College Fund or Reserve Kicker Qualification and the Post 9/11 GI Bill

Students that were promised the College Fund (also “kicker,” or “Reserve Kicker”) will continue to qualify for this under the Post 9/11 GI Bill. If eligible, the student will be paid the kicker monthly as an addition to their housing stipend. Students that are not receiving a housing stipend will still receive their kicker if they are:

  • An active duty service member
  • A veteran training at half time or less
  • A distance learner (enrolled at an online college)

9. The National Call to Service Program as a Supplement to the Post 9/11 GI Bill

For prospective college students looking for additional benefits beyond the Post 9/11 GI Bill, the National Call to Service program allows students to qualify for one of the following incentives:

  1. Cash bonus of $5,000
  2. Repayment of a qualifying student loan not to exceed $18, 000
  3. Entitlement to allowance equal to the 3-year monthly chapter 30 rate for 12 months ($1,034 effective Oct 1, 2005)
  4. Entitlement to allowance equal to fifty percent of the less than 3-year monthly chapter 30 rate for 36 months (Fifty percent of $840 effective Oct. 1, 2005)

In order to be eligible for this supplemental financial aid, the prospective college student must fulfill the following criteria:

  1. First, after completion of initial entry training, individuals must serve on active duty in a military occupational specialty designated by the Secretary of Defense for a period of 15 months.
  2. After this, and without a break in service, these individuals must serve either an additional period of active duty as determined by the Secretary of Defense, or a period of 24 months in an active status in the Selected Reserve.
  3. After completion of this period of service, and also, without a break in service, the remaining period of obligated service specified in the agreement will be served as follows:
    • on active duty in the armed forces
    • in the Selected Reserve
    • in the Individual Ready Reserve
    • in Americorps, or another domestic national service program jointly designated by the Secretary of Defense and the head of such a program

10. California and the Post 9/11 GI Bill

The original rules of the Post 9/11 GI Bill did not provide any support for California schools, because they do not call their fees “tuition”. However, revisions of the rules now provide up to $333.75 per credit hour, with a maximum expenditure of $2,165.25 for tuition and fees to in-state students at public schools, per term.

For More Information

Please feel free to search our site for additional details. Or, post your questions in the comments section below. Typically, our staff is able to assist you with specific benefits questions within 24 hours.

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  • Gill

    How does one opt for the Post 9/11 Bill as opposed to the Montgomery GI Bill?

    • Kourtnie McKenzie

      Gill–To opt for the Post 9/11 GI Bill, fill out the application at the VA’s website. Once you fill this application out, it is not changeable (you will be with the Post 9/11 GI Bill and unable to go back to the MGIB), so make sure to do research to find out which one is the best for you. Hope this helps!

  • Jennifer Humann

    My husband is still on active duty after 19 years in the Army. He finished his degree without using the GI Bill. As soon as he was allowed to initiate paperwork to transfer the benefits to our 3 children (each receiving 12-months), he started the process. Two of the three are away at college now and neither have recieved any funds as of yet. My husband is not allowed to talk to VA on thier behalf. The process is confusing and difficult, as thus far, the VA has “misplaced” our sons paperwork 3 times (he has submitted it 4 times and has gotten confirmation that it was received each time.) We are nearly desperately broke from paying out of pocket for TWO students to attend college, but our children are not eligible for the $3,000 emergency VA advance–everyone can receive it EXCEPT dependants. We are at a loss as to what to do to advocate for our rights and to help our children get the benefits paid that have been transferred to them and applied for in August! It has come to the point that one of them may not be returning after Christmas break if funds don’t come in soon. Is there any help out there for situations like ours? Who do we talk to if VA will not take our calls? HELP please!

    • Kourtnie McKenzie

      Jennifer,

      If you have not tried yet, visit your VA’s regional office. Ask to speak with a manager there. Explain the issue to them; they might be more receptive than if you handle it over the phone. The other option is to contact your local Congressman and explain the issue in hopes that it will receive more attention when brought further up the chain.

      I’ve been tracking the financial aid requests on the VA’s website, and it looks like they’re reaching well over a thousand “applications complete” every week–but the problem is, that is extremely marginal in comparison to the amount of applicants left to go. I can’t honestly tell you when your funds will be processed, but know that there are others out there that are struggling just as much as you are; you’re not in a minority. There’s students being evicted from their apartments because of this tragedy.

      I read (and posted about) today that the VA has set forth a plan to call every single student that hasn’t received their benefits. I’m not sure if they’ll carry that through or not, but that’s their quick fix for the enormous problem that’s landed in their laps. They’re working on an electronic system to handle these processes for future semesters as well–I personally wish there’d be less staff on that and more on getting the current applications processed!–but this semester, lots of people’s hands are tied due to how they delegated things and were [un]prepared.

      And I can tell you from a personal standpoint that the financial aid programs outside of the VA are a mess as well. With the excruciating budget cuts that colleges have received due to the economy, there’s students that are waiting for their student loans to come through from the FAFSA. It’s a government-student financial massacre.

      Best of luck and let me know if you have any further questions; sorry I couldn’t be more help!

    • Sirwilliamf

      Someone earlier mentioned that they called pretending to be their son to the VA and their school in order to get things rolling.

  • jason

    Hi,

    I am currently trying to purchase a home loan. I got out of the military in September of 09 and have been building a business ever since. With the business so new it’s not considered stable income in the mortgage world. Is there any way i can prove that the gi bill living stipend is a source of income, considering thats my only chance?

    • Kourtnie McKenzie

      Jason,

      The Post 9/11 GI Bill gives benefits to military students. You’d have to be enrolled in a campus-based school to receive the housing stipend. Hope this helps!

  • Eric J

    Be sure the school has sent the enrollment certificate and it has the correct info. my son’s school sent it late, and with incorrect info on it causing the VA to deny it. the bad news is, the VA didn’t tell the school, so no one knew until I contacted the VA. The VA and the school refuse to work with the parent because the children are 18 and “adults”. i just called pretending to be my son to both the school and the VA to get the stuff fixed. You need to know you must stay on top of this or the school will sit on the paperwork….. and then it’s is up to you be make sure the VA received it and accepted it….. don’t expect payments to be steady and on time….but hey, it’s better late than never…..

  • bob K

    Post 911 transferred to child…will BAH be taxable income for my dependant?

  • Ryan

    MY school put my GI bill as a grant/scholarship on my 1098T tax form this lowers my education tax credits that i can file for in that tax year. I thought my GI bill was none taxable and this action clearly affects my taxes. My college says they are right in doing this. Are they correct???

    • Christopher

      No, they are incorrect. However, your Fafsa may request info on va entitlements etc. It also may request to know how much you have in the bank. The MGIB benefits are not taxable.

  • Aydin B.

    Ryan. Your school is not right in doing so. The GI bill is considered a grant, and therefore NOT taxable, it is used for educational benefits. My school specifically did not issue me a 1098T b/c my school was fully paid for by the VA. Your best bet would be to go speak with a tax advisor to be 100% certain. I did this already, but you should probably go and hear it for yourself.

    Hope that helps!

    By the way… if anyone knows if there is there a way i can prove that the gi bill BAH is a source of income to get qualified for a home loan, please let me know. So far, both the banks I talked to wont accept that as a legitimate source of income, I dont get it?? Its being paid for housing purposes, and its on a month to month basis! Why cant I claim it as income?? O well, hope someone can help!

  • CHRIS

    DOES ANYONE KNOW IF THE POST 9/11 EFFECTS FEDERAL STUDENT LOANS AS FAR AS AWARDS ARE CONCERNED?

    • Christopher

      not that I am aware of.

  • Tim

    Can the Post 911 bill Pay back what you already owe for college?

    • Christopher

      no sir

  • Another Tim

    @ Ryan: I had a guy come in to do his taxes telling me the same thing you did about his financial advisor saying that the GI bill money would still qualify him for education credits. I was dubious about this since I’ve never heard of it but prepared it the way he said since he claimed this is what he was told and what someone else was able to do. I’m fairly doubtful on this as like you said on the 1098T GI bill money is listed under “grants/scholarships”. Aydin B. is wrong and right in a way. He’s right in that the GI bill is a grant and nontaxable, what he’s wrong about and what I now realize that the guy whose taxes I did probably misunderstood is, the whole thing about education credits. Education credits are only eligible to people who pay for their school out of pocket or from student loans which is still going to be out of your pocket. This is why you don’t qualify for the educational tax credit. The money from the grant is not being taxed itself you’re just not getting a tax benefit which is meant for people who pay for their education with their own money.

    • Christopher

      IRS will do audits on some of them I am sure and make them repay the credit. I’ve had this conversation a few times and yes someone in my office thinks they are allowed this just because they’ve done this for two years.

      • Ken

        IRS Publication 970 gives an example of this on page 6. It shows that portions of the GI Bill that are not restricted do not have to be subtracted from qualified education expenses for the tax credit.

        I want to know what they mean by restricted. The issue is whether all GI Bill payments other than the BAH are restricted. Since the money comes to you, you aren’t as physically restricted as those who’s institution receives the money directly.

        This example seems to imply that the money that is sent directly to the school is restricted, while the money sent directly to you is not restricted.

        http://www.irs.gov/pub/irs-pdf/p970.pdf

        The above address is for IRS Publication 970, and below is the example from page 6.:

        Example. You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BAH) that is directly deposited to your checking account, and (2)
        $3,840 paid directly to your college for tuition. Neither of these benefits is taxable and you do not report them on your tax return. You also want to claim an American opportunity credit on your return. You paid $5,000 in qualified education expenses (explained in detail in chapter 2). To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. You do not subtract any amount of
        the BAH because it was paid to you and its use was not restricted.

      • Ken

        IRS Publication 970 gives an example of this on page 6. It shows that portions of the GI Bill that are not restricted do not have to be subtracted from qualified education expenses for the tax credit.

        I want to know what they mean by restricted. The issue is whether all GI Bill payments other than the BAH are restricted. Since the money comes to you, you aren’t as physically restricted as those who’s institution receives the money directly.

        This example seems to imply that the money that is sent directly to the school is restricted, while the money sent directly to you is not restricted.

        http://www.irs.gov/pub/irs-pdf/p970.pdf

        The above address is for IRS Publication 970, and below is the example from page 6.:

        Example. You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BAH) that is directly deposited to your checking account, and (2)
        $3,840 paid directly to your college for tuition. Neither of these benefits is taxable and you do not report them on your tax return. You also want to claim an American opportunity credit on your return. You paid $5,000 in qualified education expenses (explained in detail in chapter 2). To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. You do not subtract any amount of
        the BAH because it was paid to you and its use was not restricted.

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  • sydney

    How could one use the post 9/11 gi bill housing stipend as proof/source of income towards a home loan application; a lot of companies refuse to recognize this sort as income. Do we need to go back to congress for this one; the thing is said to be supposed to be applied to housing costs, so how come all these companies not recognizing it as a valid form/source of income; is there a specific document that I need to know about to be submited in this situation, what can I do??? Help please!!

    • Christopher

      You can either find a new company to go to or you can talk with the administrative office to have the benefit switched to income. VA Hospitals should have the form. I wouldn’t though.

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  • michelle

    Why would you convert your GI bill over to the 9/11 Gi bill when you can get the GI bill for 2 years and add on the 9/11 GI Bill for 1 more year?? Thats three years of college instead of converting.

    • Christopher

      Depends on what program is best for you. Also depends if you can save some money in the bank. After 33 there is still a chance to apply again either for 30 or 31 chapters. VA doesn’t have the clearest regulations on this when you call them.

    • Sirwilliamf

      If you get 100% BAH and use the Yellow Ribbon benefit the money can be significant enough to warrant the change.

  • Kurt S

    Could a person still on active duty use the MGIB to take more classes a year than TA will pay for. Then still use the post 9/11 GI bill after being discharged? Sort of double dip if you will. Would using your MGIB change the benifits of the post 9/11 GI bill down the road?

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  • Balls

    YOU ARE WRONG! My BF is receiving post 9/11 and has been getting break pay since he started! LIARS

    • USMC Wifey

      HOW? We would like to know this, as my husband is busting his ass year round in order to receive continual pay and even still it’s more sporadic than consistent.

      • Shaun

        You should recieve break pay if going to school, but this is being changed now

        • Christopher

          Yes, Aug 1, 2011 there will be no educational break pay for any education benefit under VA. It was passed with the “improvements” for the Post 9/11 MGIB.

      • Shaun

        You should recieve break pay if going to school, but this is being changed now

      • Christopher

        Must have concurrent semesters with less than 56 days break in between and a timely certifying official to receive benefits without lapse. All this changes 1 Aug 2011. Thank congress as there will be no more break pay afterwards.

    • Christopher

      No drama! Your boyfriend is taking concurrent semesters, has less than 56 days of breaks in between them, has a timely certifying official and the VA processed it so he saw no gaps in his pay.

    • Slim7251

      When the program first started it included break pay. I know because I started using the post 9/11 when it first came out. Starting this year they are taking break pay away

    • Rachel

      starting when before october? as of october i can guarantee he is not . Not that you should know about his money.

  • Javier

    Why cant i buy a car using the Post 911 G.I. Bill. They told me the post 911 G.I. bill is not to be used to get loans for car. So i cant buy a car for school?

    • Kel3030

      Holy crap are you serious? Epic FAIL.

    • Kel3030

      Holy crap are you serious? Epic FAIL.

      • Joy Stephens

        Same thing is happening to me… Why exactly is it not a proof of income? I don’t get it.

        • Anonymous

          The intent of the Post 9/11 is for educational benefit ONLY.

          It is NOT applied for any other transactions.

          In other words, it is NOT considered cash rather a scholarship.

          You cannot transfer a scholarship into money.

  • Mariegranados29

    I have a question about using my post 9/11 in the begining of March of 2012. I’m currently in a personal training program that ends on March 5, 2012. I’m currently in the Army Resverves and I wanted to use MGIB-SR to pay for January and February classes. Can I collect BAH from the post 9/11 for the remainder of March thru May?

    • http://www.veteransbenefitsgibill.com Veterans Benefits GI Bill

      I am out of the office with limited access to email and voicemail until the 3rd of January. If you require immediate assistance, please contact Ryan McArthur at rmcarthur@usinteractivemedia.com.

  • Davidandmarie17

    OK so I get that you dont claim the Post-911 GI Bill as income. Check. Now my question is this. Do I claim it under the “education assistance” section? There is a slot there for Veternas Benefits.

  • Tom Mc Cormick

    I’m applying for an apartment, and they accept the BAH from my Chapter 33, but they want proof (like paystubs)- how do I get that??

    • Prose

      I’m STILL looking for someone to answer this question! :-S

      • http://www.veteransbenefitsgibill.com Veterans Benefits GI Bill

        You should be able to access financial statements by logging in here: https://mypay.dfas.mil/mypay.aspx

  • Drop576

    Is the monthly housing allowance I receive under the Post 9/11 GI Bill taxable?

  • Tmanwa04

    I am in the national guard and just returned from deployment overseas and I am 7 days short of 18 monthes and the 80% rate for my Post 9/11 GI Bill. My question is: I was on ADSW (Active Duty Service Work) orders for 6 months prior to the deployment. Can I count that towards my Post 9/11 GI bill time to get the 80% rate?

  • David

    Hello, you state that you do qualify for the Post 911 GI Bill if you sign up under the National Call to Service? I’ve found many other people stating that you do not qualify for any GI Bill benefits if you signed up under the National Call to Service program. Why does there seem to be conflicting opinions? Thank you

  • Falynkinsey

    I live in California and I just recently filled for child support through the courts. They are basing what he has to pay me off what he and I make a month, My question is do I have to claim my Post 9/11 BAH since its none taxable and I only get paid it if Im in school the amount is based on my status? 

  • Jry1991

    We are trying to apply for assistance & use my husband school VA housing income as “our income” & need proof of income, but have come up with NOTHING! we’ve gone to the VA & called & they can’t help us?