Stipends used for educational study or research while pursuing a degree aren't taxable income, according to H&R Block. However, stipends used for living expenses by a nondegree student or received in exchange for delivery of services are typically taxable income.
Qualified purchases with nontaxable stipends include tuition, books, equipment and supplies, according to Washington University in Saint Louis. Stipend money used for educational pursuits that benefit the grantor are taxable, reports H&R Block, as is money received for performance of current or future services. When the stipend is a payment for services, the person making payment should provide the recipient with a Form W-2 by Jan. 31.