A stipend is simply a set amount of money paid regularly to cover the cost. Unlike a salary or full income paid to an employee, it is usually a payment made to a trainee, student, or learner for compensation for their work or for their living expenses. Scholarships or fellowships are also usually in the form of a stipend and are awarded directly to you. Stipends are payments made directly to students to help them keep track of their studies, training, or research. So let’s begin with What Is A Student Stipend?
Stipend awards can be one-time-only, but they’re frequently given out every month, and you can’t obtain the same stipend from the same firm twice. Departmental and corporate awards may also be available through sponsored programs at various schools and universities.
Stipend Vs Salary
- Employees receive a salary, whereas interns and apprentices receive a stipend.
- In the case of full-time opportunities, the employer-employee relationship occurs, and in the case of stipends or part-time opportunities, the student-mentor relationship exists.
- When it comes to taxation, salary is taxable, however, a stipend may or may not be.
- Salary may be increased based on performance, but stipend remains constant regardless of performance.
- The goal of a salary is to make money, whereas the goal of a stipend is to expand one’s knowledge base.
Types Of Stipends
Stipends are available to offset the costs of various volunteer and unpaid jobs. Employers may provide stipends in the following situations:
- Academic studies
- Wellness and health insurance
- Apprenticeships and job training
- Internships
- Fellowships
- Clergy
Characteristics Of Stipends
The most prevalent forms of stipends are those granted to assist with housing and board or travel expenses. Graduate schools may provide students with general or special purpose stipends to assist with the expense of school-related materials or equipment. Employers frequently pay stipends to temporary interns or employees to help with some of their expenses. Stipends obtained from employers do not have to be for any minimal amount of time or amount to minimum wage. Stipends for internships allow people to gain vital knowledge and experience while working in a profession they want to pursue as a career.
Uses Of A Stipend
The most common purpose of a stipend is to cover living, eating, and travel expenses. However, stipends encourage particular pursuits, such as scholarly research or job growth through continuing education. Stipends for technology equipment such as laptops may be available at some schools. Employers may provide a stipend in addition to a regular wage to cover health insurance or gym memberships to encourage healthy behaviors.
Conclusion
Stipends are a simple yet efficient way for you to invest in your staff. These readily available monies are simple to demonstrate and can greatly improve employee happiness and engagement.
According to research, contented employees are 14-24 percent more productive than those who are dissatisfied with their jobs. This means that putting more money into your staff can be a great strategy to boost everyone’s productivity and happiness. If your team is largely remote, stipends are a terrific approach to keep employees motivated and happy.
FAQs
- Are stipends legal?
They’re legal as long as they’re utilized in accordance with your administration’s tax regulations. Stipends are now used as a fringe benefit equal to legitimate salary, rather than being used to avoid properly compensating employees in the past. Stipends should never be utilized to exclude someone from a salaried position, either partially or completely.
- Stipends: Are They Taxable?
In the United States, most stipends are considered taxable income, meaning that beneficiaries must pay taxes on the amount received. However, because stipends are not considered earned earnings by the Internal Revenue Service (IRS), businesses will not need to deduct Medicare or Social Security taxes from the entire amount. Instead, when the beneficiary files their tax returns at the end of the fiscal year, they must set aside a portion of their stipend to pay community and state taxes.
- What makes stipends so appealing?
Stipends start the process and make it more manageable. Stipends provide your staff with a lot of flexibility and opportunity, in addition to clarifying things for you.
Although it’s a good idea to establish regular standards for how your stipends should be spent, splitting the money into basic categories is probably sufficient. This flexibility allows your employees to customize their experience while also reducing the supervisory strain on your managers and HR team.
- What Is the Difference Between a Salary and a Stipend?
A salary is a fixed sum paid for work done over a period of time. A stipend, on the other hand, is not intended to be used as remuneration for work, but rather as financial assistance for a variety of reasons, such as travel or training fees, or to cover some living expenses. Stipends are often lower in value and may be less than minimum wage.