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Stipends are not considered as wages so employers will not withhold income tax on any stipends made to employees. However, stipends are often considered income so you as an individual will have to calculate and pay taxes on any stipends received; this includes Social Security and Medicare.
2 MIN READ Financial Terms. A stipend is a payment made to a trainee or learner for living expenses, unlike a salary or wages, which are paid to an employee.
There are a few key differences between stipends and salaries. The primary difference is that a stipend is given to support someone while undergoing training or learning and isn't considered compensation for work performed. On the other hand, salaries are given to employees as compensation for their work.
An employee can be paid a stipend for many reasons. Stipends for mileage or other types of reimbursement are common, as are payments for special events, such as music performances.
The definition of a stipend is a sum of money paid at regular intervals. An example of a stipend is a small sum of money paid to a graduate teaching assistant by the school to cover living expenses.