I would like to formally apologize and thank the United States Government for taxing my Stop Loss Backpay Compensation. Despite being deployed to a combat zone in 2005-2006 for twelve months of my fourteen month involuntary extension, I was wrong to criticize that $800, essentially 80% of the pay received for the two extra non-deployed months ($500 per month x 2 months = $1000; $800 = 80%), had been taken from my Stop Loss Backpay Compensation received in February 2010.
Government, you were right and now I am thankful that this earned income allows me, an unemployed full-time student with three dependents, including an unemployed single-subject-credentialed science teacher for wife, to receive the Earned-Income Tax Credit bringing my tax return to -$241.
But on my University 1098-T, my non-taxable, not-supposed-to-be-reported Post-9/11 GI Bill benefits are included in the sum in Box 2. But if I subtract my education benefits, like it says on IRS Publication 970, page 8:
“Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Do not include these payments as income on your federal tax return.”
I get a completely different and generous positive result.
So does that mean I assume my 1098-T is wrong and that I can make the manual calculation myself And, if I am audited, am I in the wrong for not entering into Box 2 what my 1098-T erroneously says?