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A stipend, sometimes called a lifestyle spending account, is a fixed amount of money offered to employees to help pay for work expenses, travel expenses, living expenses, wellness expenses, and more. There are several types of stipends to choose from. Its best to think of these benefits as monthly allowances.
The IRS explains that your stipend may be reported on Form W-2 or Form 1099-MISC. You are responsible for determining whether you were paid as an employee or independent contractor and whether or not the income is subject to self-employment taxes.
A stipend is a form of compensation paid to certain individuals to help cover basic costs while they receive career training. Stipends may be offered in lieu of or in addition to a salary. Interns, apprentices, fellows, and clergy are common recipients of stipends.
Stipends can be financial assistance or an allowance to a person interested in working and learning simultaneously from a particular employer. For example, interns in a bank, trainees in a logistics firm, apprentices to an artist, research assistants in a lab, etc., receive such compensation.
Students who are awarded scholarships or fellowships often receive the money as a stipend. The money is a direct payment to the student, rather than paying the school for tuition and fees on their behalf. In other cases, a program might offer a stipend in addition to other forms of financial aid.
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A stipend does not count as wages earned, so no Social Security or Medicare taxes get withheld. This means your employer will not withhold any taxes for you. However, a stipend does count as taxable income, so you will need to plan to set aside money for the taxes you will owe on your stipend at the end of the year.
A stipend does not count as wages earned, so no Social Security or Medicare taxes get withheld. This means your employer will not withhold any taxes for you. However, a stipend does count as taxable income, so you will need to plan to set aside money for the taxes you will owe on your stipend at the end of the year.
A scholarship/fellowship used for expenses other than qualified expenses is taxable income. Taxable scholarships/fellowships are generally referred to as stipends and are payments for which no services are rendered or required.

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