How should Cassandra report her scholarship income on her tax return?

Cassandra should report her scholarship income accurately to ensure compliance with tax regulations. Scholarships are generally considered taxable income if they are used for purposes other than qualified education expenses, such as tuition, fees, and required course materials. If she has received a scholarship but also has other income, such as wages reported on Forms W-2, she needs to include all of this income in her tax return to provide a complete financial picture.

When both scholarship income and earned income from employment (reflected in Forms W-2) are present, it is crucial to report all forms of income as part of the total income on her tax return. This approach ensures that she is not omitting any sources of income, which could lead to potential issues with the IRS.

As for the other options, solely including scholarship income would ignore her other sources of income, omitting potentially taxable earnings. Reporting only part-time income fails to capture the full extent of her financial situation. Filing a paper return and simply noting scholarship amounts does not ensure that all her income is accounted for on the return in the proper manner. Thus, including both Forms W-2 along with relevant scholarship income provides the most accurate and compliant approach.