If you are awarding prizes to students for contests or drawings and none of the conditions listed above apply, the prize is not treated as a scholarship. The prize is includable as taxable income to the winner under IRS regulations, even if the winner is a student. A non-scholarship prize must be processed in one of two ways to ensure appropriate reporting by the university:
- If the prize is a cash payment or cash equivalent (e.g., gift card), it must be processed as a check request through Buy.IU. Documentation on how the contest or drawing was conducted must be entered into the notes section.
- If the prize is a non-cash item, please refer to Tax Standard Operating Procedure 9.03 for processing guidance. Some examples of non-cash items are tangible personal property (e.g., picture frames or clothing) and complimentary services. For further questions, contact the Office of the Controller.