Stipend vs. Scholarship vs. Research Grants – Taxation Methods
To whomever you are, firstly – thank you for contributing to research and development and pursuit of furthering our knowledge of a particular field. Without your efforts and intellectual curiosity, we would be naught for progress as a civilization, and relegated to becoming accountants. Keep up the good work..
Now – let’s examine the taxation of the various grants/monetary stimulus you can receive as a research scientist.
A stipend fully taxable and reported as wages, although W2 not issued;
Scholarship – partially taxable. Amount spent on tuition and qualified education expenses (provide link) not taxable, the remainder is taxable ordinary income. Reported on 1098-T if from USA stipend is treated as a
Scholarships are tax free (excludable from gross income) if you are a candidate for a degree at an eligible educational institution. These payments will not generate a W2, 1099, but if received from a US institution it will be on form 1098-T.
Whole Story at TFX.