Incorporation of the V3+ and V4+ ions into the yttrium aluminum garnet Y3Al5O12 (YAG) lattice has been studied by the correlated optical absorption and electron paramagnetic resonance (EPR) measurements. Only the V3+ ions at both octahedral and tetrahedral aluminum sites are found in as-grown crystals. However, annealing in air leads to the transformation of the V3+ to V4+, whereas annealing in the hydrogen atmosphere remains the V3+ concentration almost unchanged. Spin Hamiltonian parameters of the V3+ and V4+ ions at the tetrahedral sites including the zero field splitting and 51V hyperfine constants are determined using high-frequency, up to 300 GHz, EPR measurements. By using the spin Hamiltonian parameters, the ground state energy levels splitting of the V3+ and V4+ ions were calculated in the framework of the crystal field theory. The g and hyperfine tensors suggest that electron density around the tetrahedral V3+ ion is distributed strongly inhomogeneously resulting also in large (40%) reduction of the spin-orbit coupling constant whereas the tetrahedral V4+ ion exhibits weaker covalent bounding with surrounding ligands. Furthermore, the obtained EPR data on vanadium ions allow to improve identification of the optical absorption peaks in YAG:V crystals.