Which tax year is this scholarship income applied to?

Forum|Forum|4 years ago
May 12, 2021
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I finished my final semester of college in the spring of 2020. The due date for paying tuition for this final semester was 12/30/2019. The amount of scholarships that I had been awarded was greater than the cost of tuition, so my school used the scholarship money to me to completely pay for tuition, and then sent me a direct deposit to my bank account for about $2k for the amount of scholarship money that was still left over after tuition had been covered. According to my school, as seen on my statement of account, these transactions (paying tuition with scholarship and sending me the money left over) took place on 12/30/2019 and so this scholarship was included in my 2019 1098-T form. However, the $2k direct deposit from my school did not actually show up in my bank account until after a few days into 2020. This money was not used to pay for required supplies, books, etc, and so I must report it as income. Should this scholarship income be reported on my 2020 tax return or my 2019 tax return?

Hal_Al

Employee

You may not get a firm answer to that question.

The rule is when you have "constructive receipt". Being applied to your account in 2019 could be considered constructive receipt. The 2019 1098-T helps support that position. On the other hand, you couldn't really spend the $ until 2020.

I would do what ever works out best for you, which is probably calling it 2019 income.