A stipend is usually lower as compared to a salary. In exchange for a little monetary reward, the recipient gets the experience and expertise. This type of payment is sometimes referred to as an allowance, and it is usually given on a daily, weekly, or monthly basis.
Stipends are usually granted as a kind of compensation for the work. For instance, Internships or apprenticeships are crucial stepping-stones for all students, whether they are in academia or have recently graduated from college. These are opportunities to broaden one’s knowledge and experience in one’s field. An intern can be paid a small sum of money as a stipend to compensate for the work he does during the internship or to meet some of his expenses, but the main focus of the internship is to expand the learning, knowledge, and experience of the intern.
Forms of Stipend
Stipends vary greatly depending on the organization and the purpose of the stipend.
● Stipends to cover Living Expenses
Stipends are frequently offered by institutions (i.e academics) or organizations in place of a salary or hourly wage. Graduate students, interns, trainees, volunteers, and clergy are all common recipients of these types of stipends where they serve an institute/organization. The goal of the stipend is to cover the living, travel, and food expenses of the recipient or compensate him for his work and services.
● Stipends for Academic Research
Stipends in academic research are similar to scholarships in that they are paid to persons who perform research in a certain sector. In cases where a third party is involved like an organization or institute that wants the individual to do research and provide data to them, the unpaid research assistant is allowed to complete the task without any financial constraints.
● Stipends for career advancement
Some employers provide stipends for job training, allowing employees to attend conferences or obtain certifications that will aid them in their work and help them advance their skills.
● Stipends for health and wellness
Some companies include wellness stipends in their benefits package or perks system to encourage employees to participate in classes, join gyms, or buy items that will help them live a healthier lifestyle.
● Stipends for Medical insurance
Employers who do not provide healthcare insurance to their employees may instead provide health insurance stipends to assist employees in covering health-related expenses.
● Stipends for Volunteering
While volunteers are not usually compensated for their services, they may be eligible for a stipend in exceptional cases. One example is a volunteer who travels abroad to assist people in other countries. The stipend may include the travel, hotel, and meals expenses but it doesn’t include the expenses for the services provided by volunteers.
One of the most noteworthy advantages of a stipend is that your company will not deduct any taxes from your paycheck. You can keep whatever you earn, but it doesn’t mean the stipend is tax-free. This is just because stipend recipients do not have Medicare/Social Security taxes deducted from their pay.
How Stipend differ from a Salary?
While both stipends and salaries are ways to compensate people for their work, they are very different in the following ways:
Stipends and salaries are taxed differently in the United States. While both stipends and salaries are considered taxable income by the IRS, salaries have auto taxes withheld, while stipends require the recipient to pay taxes on the amount at the end of the fiscal year.
Is it feasible to negotiate stipends?
Depending on the organization and type of work, you may be able to negotiate a raise in your stipend. Before requesting a raise, the reader is advised to perform legal research and recommended to consider the following factors before asking for an increase:
● Look for other positions of similar nature. If they are getting paid more than what you are offered, ask for a raise.
● Evaluate if the offered stipend will cover your living expenses, if not, ask for a raise.
● If a raise is not possible, look for another benefit that you can receive instead of more money.
What can you do with a stipend?
A stipend is not the same as a salary, it doesn’t compensate for the work you do because your main purpose is to learn during that job. However, a stipend can be utilized to fulfill the following,
Travel expenses: If the nature of your job requires you to travel on regular basis, you can use the stipend money to cover it. Living: If the nature of your job requires you to stay at an apartment, flat, or hostel, you can use the stipend to meet this expense. Food: If your working hours have lunchtime included in it, the stipend can help meet the daily lunch expense.
Conclusion
A stipend is a set amount of money given to those who do unpaid work to cover their living, travel, and food expenses. An organization/firm cannot hire an employee with a stipend. Only people who are not qualified for a regular salary/wage are provided with the stipend. The stipend is not the same as the salary, however, it can be negotiated. The stipend is taxable but there is no monthly social or medical security deduction. You only need to pay tax at the end of the year.
