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Stipend Payment to Employee

Can employee receive stipend pay and wages?
What is the tax ability of stipend paid to employee?


  • "Stipends" are almost always fully taxable wages. Anything of value you give an employee for almost any reason is normally fully taxable wages. What you call something means nothing to IRS.

    Do you have any reason to believe you have an exception here? Example. Lets say I run a half way house and I give residents/clients $20/week. That is income (1099) but not wage (W2). I can come up with more exceptions but it would be a lot easier to have some actual facts to work with.

  • thank David!! the taxability part I understand now.

    Stipend is for Trainee/Learner not employee who currently receive wages.

    The employee receive wages and in addition to that HR are requesting to pay stipend for additional responsibility.

  • Pretend that I am an IRS auditor. I (by definition) do not care what you say. You need to PROVE that the payment has nothing to do with the person being an employee. If the person is legally an employee, you have to PROVE that this is a random event like a lottery drawing (still 1099). That the payment was nothing to do with EVER being an employee. The person whom you are claiming is not an employee, you have to PROVE that no work of any kind was done (still 1099).

  • "The employee receive wages and in addition to that HR are requesting to pay stipend for additional responsibility."
    Right - the stipend is an HR designation to the compensation so that the amount is not confused with a raise in regular salary but is compensation for assuming the additional duties or responsibility and when the duties or responsibility end so does the stipend.
    For example, I know of a processor of dentistry who, in addition to the regular responsibilities of a professor (teaching, committees, scholarly work, etc.) has been appointed :practice director: for certain student clinics. This involves some additional administrative work and responsibility so she is compensated extra for that via a "stipend" of a certain amount per semester. From a tax standpoint, it is the same as additional salary. Next semester she opted to no longer be a practice director and will no longer receive the stipend. Her other compensation and the related duties will not change.

    In contrast, when I was faculty team leader for our academic program, I did not receive a stipend for assuming the additional administrative duties - instead, my teaching load was reduced. When I left the team leader position, I resumed a normal teaching load. Without a stipend or a reduction in other duties, there would be little incentive for the employee to take on the additional duties and responsibility.

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