Ann is a graduate economics student at State University. State University awarded her a $1,000 scholarship. She works as a half-time teaching assistant in the Economics Dept. at State University and is paid $7,000 per year and her tuition is waived; tuition is $8,000 without waiver. Her salary is equal to that paid to other part-time instructors. Ann paid $500 for her books and supplies and she incurred living expenses of $7,400.

Ann gross income is 7,500

explain to Ann the tax consequences of this amounts.