Are PhD Stipends Taxable?

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Colleges and universities may offer graduate students in certain disciplines a stipend. The Internal Revenue Service defines an educational stipend as a fixed amount of money paid to the student on a periodic basic to help defray costs. Stipends for stipends for PhD programs may be taxable depending on how the funds from the stipend were used, and the conditions under which they were paid.

Degree Program

If you are not a candidate for a degree, the entire amount you receive, whether in the form of a stipend, fellowship or scholarship, is fully taxable as ordinary income. If you are a candidate for a degree, such as a PhD, you can exclude from your income any amount received from a stipend, grant, fellowship or scholarship that you used to pay for fees and tuition that the institution required for enrollment or attendance. You can also exclude amounts paid for books, supplies, fees and equipment that are required for all students in the same course of study.

Payment for Services

The Internal Revenue Service considers any portion of your PhD stipend that you received in exchange for services rendered, whether past, present, or future, to be taxable wages which you must report when you file your federal income tax return. This portion of your stipend is taxable regardless of whether or not rendering such services is a requirement or condition for receiving the funds.

Terminology

Federal and state tax regulations typically refer to scholarships and fellowships rather than using the term, stipend, according to the University of California Northridge. Scholarships typically refer to amounts paid which benefit students, including students in graduate level programs such as a PhD program, who are pursuing studies. Fellowships typically refer to research grants. Both scholarships and fellowships may involve the payment of a stipend.

Considerations

The institution paying the stipend may or may not withhold taxes from the stipend. Institutions that do not withhold taxes from your stipend may or may not provide you with a Form W-2 or a Form 1099-MISC. It is your responsibility to report the proper taxable amount of any stipend your receive to the Internal Revenue Service when you file your federal income tax return, regardless of whether or not you receive a Form W-2 or Form 1099-MISC.

References

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