A stipend as payment received is not a salary or a wage, nor does it is based on the hours worked. This is a compensation, fairly low than the salary amount that an individual receives while working as volunteer, doing internship or apprenticeship, fellowship, a graduate program etc. The work done during a specific period of time does not considered as Output achieved this is in fact considered as training, learning or application of concept in practical way. Some internships or apprenticeships are required by certain universities and educational Boards across the world in order to get proof of individual`s learning. Fairly speaking, internships which are reasons of stipend as a lower wage is form of development through which an individual can better justify his/her position to be rewarded fairly better in coming future. On contrary, internships does not promise a better and high salary jobs but still provide an evidence of credibility of individual`s competence.
Not always, but mostly a stipend is augmented by certain other benefits like food, accommodation and accreditation above all benefits.
Not for profit organizations for some welfare cause may call volunteers from youth community. These types of welfare works also pay stipend but this is a handsome amount to compensate volunteers for noble task which serve the oppressed or distressed people. Normally the aggregate period of this type of stipend is less than a year.
Students and professionals get this form of stipend while attending their college to pay their educational expenses like tuition fee and study material require during a complete semester. In this case this stipend is paid as fellowship grant. Universities pay such stipend as professional scholarship which will continue till the completion period of degree or a research assignment.
Doctoral programs also offer stipend to student for the whole period comprising five years. Brown University is providing 5 years of financial support to graduate students which includes stipend, health insurance and a complete study plan. This financial support is given under the role of fellowship, proctorship or teacher/research assistantship.
Internal Revenue Service, IRS has provided guidelines regarding tax matters of above mentioned stipends.
IRS declares one part of professional stipend exempted from tax i.e. the proportion of fellowship grant paid for tuition fee, books, and stationary expenses is not taxable.
The other part of fellowship grant paid to fulfill health, travel, research and relocation expense is considered as taxable income. In both cases an individual is bound to keep all receipts and vouchers to show the evidence about taxable or exempted income. Tax department will provide list of all taxable or non taxable items on your fellow ship letter. In some cases, graduate may receive this form of fellowship grant on his/her payroll. Human Resource department will issue a letter showing proof of payroll record and then tax department will take legal measures accordingly.
Some educational board like Masters, graduates as well as professional qualification require its students to attend a period of apprenticeship to gain credibility of their professional skills and knowledge. These are usually undertaken in professional regulated firm. Stipend rate for such internships vary depending upon the eligibility of candidate.