Hi,

I would appreciate a little help with my taxes. I am a resident alien for tax purposes. My wife is a non-resident and we have elected to file taxes jointly as residents for 2007.
For the year 2007 my wife had a scholarship amount of 7000 from her school. 14 % of her scholarship was taxed. We had to pay a total of 9100 dollars as tuition for her FALL semester. My wife did not have any other earnings. Her 1042-S form for the fellowship says the amount is non-qualified.


I have the following questions:

1) since the 7000 dollars fellowship was used for paying tuition isn't the fellowship amount
Tax-free.

2) If the answer to the first question is yes then can I also claim a education(tuition credit) for the remaining 2100 dollars not covered by the fellowship.

Thanks for your help

1. If you are a degree candidate and if the financial aid (includes scholarship and fellowship) is for tuition fee, other fees, books, supplies and equipment, then it is not taxable. For a degree candidate aid for boarding and travel are taxable.
If you are not a degree candidate, then all the financial aid is taxable.

2. Yes.