Definition
A stipend is a regular fixed sum of money paid to an individual typically to support learning, training, or an intern position and often covers minimal living expenses. Stipendiary individuals or roles often include interns, trainees, fellows, and apprentices, among others.
Examples
- Internship Stipend: Many organizations pay interns a monthly stipend to help cover their living expenses while they gain work experience.
- Fellowship Stipend: Academic fellowships often come with a stipend to support the fellow’s research and other scholarly activities.
- Apprenticeship Stipend: Apprentice programs in trades such as carpentry or plumbing may provide a weekly stipend to support the apprentice during their training period.
Frequently Asked Questions (FAQs)
What is the difference between a stipend and a salary?
A stipend is typically a fixed sum paid periodically to cover basic living costs, often associated with training or educational roles. A salary is regular compensation for employment services, usually with benefits and tax withholdings.
Are stipends taxable income?
Yes, stipends are generally subject to income tax, even though they may not have the standard tax withholdings that regular salaries do.
Can a stipend be considered a form of grant?
Yes, in some academic and research contexts, stipends can function similarly to grants, providing financial support without requiring repayment.
Do stipends usually come with benefits?
Typically, stipends do not include benefits such as health insurance, retirement plans, or paid leave, unlike standard full-time employment salaries.
Related Terms
- Salary: A regular fixed payment made by an employer to an employee, typically expressed as an annual sum.
- Wage: Payment for labor or services, often calculated hourly, daily, or weekly.
- Allowance: A sum of money granted regularly, often to cover specific expenses.
- Honorarium: A payment given for professional services that are rendered nominally without charge.
Online Resources
- Internal Revenue Service (IRS) on Taxable and Nontaxable Income
- Society for Human Resource Management (SHRM) on Stipends
Suggested Books for Further Studies
- “Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy” by Ross Perlin
- “A Handbook for Managing Mentoring Programs” by Gjyn O’Toole and Simon S. O’Hiskey
- “The Art of Funding and Implementing Ideas: A Guide to Proposal Development and Project Management” by Arnold R. Shore and John M. Carfora
Fundamentals of Stipends: Finance Basics Quiz
### What is the primary purpose of a stipend?
- [ ] To provide full compensation for employment.
- [x] To support basic living expenses during training or learning periods.
- [ ] To replace a salary in full-time positions.
- [ ] To cover travel expenses only.
> **Explanation:** Stipends are primarily aimed at covering basic living expenses during periods of training, internships, or fellowships, rather than providing full employment compensation.
### How is a stipend typically paid out?
- [ ] Quarterly
- [x] Monthly
- [ ] Annually
- [ ] Only upon project completion
> **Explanation:** Stipends are typically paid out monthly, but payment schedules can vary depending on the nature of the program or role.
### Does a stipend usually include employee benefits?
- [ ] Yes, it includes full employee benefits.
- [ ] Sometimes, health insurance is included.
- [x] No, it usually does not include benefits.
- [ ] It depends on the company policy.
> **Explanation:** Stipends usually do not include benefits such as health insurance, retirement plans, or paid leave.
### Are stipends subject to tax?
- [x] Yes, they are typically taxable income.
- [ ] No, they are always tax-free.
- [ ] It depends on the amount.
- [ ] Only if they exceed a certain threshold.
> **Explanation:** Stipends are generally subject to income tax, even without the standard withholdings of regular salaries.
### What type of positions commonly receive stipends?
- [ ] Full-time employment
- [x] Internships, fellowships, and apprenticeships
- [ ] Senior management roles
- [ ] Sales positions
> **Explanation:** Stipends are commonly associated with internships, fellowships, and apprenticeships, which are often training or learning-oriented roles.
### How does a stipend differ from an honorarium?
- [ ] A stipend is typically larger.
- [x] A stipend is regular, while an honorarium is typically a one-time payment.
- [ ] A stipend is tax-free.
- [ ] An honorarium includes benefits.
> **Explanation:** A stipend is a regular payment, while an honorarium is typically a one-time payment for services rendered without charge.
### Which of the following is NOT typically a role that would receive a stipend?
- [ ] Intern
- [ ] Research Fellow
- [ ] Apprentice
- [x] Full-time salaried employee
> **Explanation:** Full-time salaried employees receive regular salaries and benefits, not stipends.
### What is the main tax consideration for individuals receiving a stipend?
- [ ] Ensure it is categorized as tax-free.
- [x] Stipends must be reported as taxable income.
- [ ] Apply for a tax exclusion form.
- [ ] Ensure it is under a certain amount.
> **Explanation:** Stipends must be reported as taxable income even if they do not have the standard withholdings.
### What might a stipend recipient need to budget for that salaried employees may not?
- [ ] Monthly rent plans
- [x] Self-employment tax
- [ ] Union dues
- [ ] Regular employee meals
> **Explanation:** Stipend recipients may need to budget for self-employment tax due to the absence of regular withholding taxes.
### Which term is most closely related to a stipend?
- [ ] Commission
- [ ] Bonus
- [ ] Minimum wage
- [x] Allowance
> **Explanation:** An allowance, like a stipend, is a sum granted regularly to cover specific expenses, though stipends are more often tied to educational or training contexts.
Thank you for diving into the intricacies of stipends and testing your knowledge with our focused quiz. Keep honing your understanding to excel in your financial and professional journey!
