<p>He can file the 1040EZ. The scholarship amount is included with any other earned income on line 1 . D filed a paper copy because you need to write on the return SCH followed by the taxable amount of the scholarship on the line to the left of where you put the normal line 1 number. Just go to the IRS website and print the 1040EZ form and instructions.</p>
<p>You can take the education credit for his books or as you indicated subtract the cost of the books from the $9570 to obtain the amount of taxable scholarship he has to claim. This would mean you would have to file an amended return but you would get more in a tax refund than the extra he would pay if he doesn’t subtract the cost of the books. It’s ok for the 1098 numbers not to match up; just document how you arrive at the numbers you use.</p>