What Are Fellowship Grants?

A fellowship is a funded position usually awarded to allow the recipient to carry out research. For example, a graduate student might get a fellowship so she can work on her dissertation. The grant describes the money involved in the gift. In everyday use, a fellowship grant may be referred to simply as a fellowship.

Fellowship Grants as Income

The Internal Revenue Service considers fellowship grants tax-free provided certain conditions are met. The institution giving the grant must meet several IRS standards, which means it must have a regular faculty, a curriculum and a student body. The recipient must be enrolled in a program leading to a degree and has to agree to use the money to pay for tuition and fees. The money can also cover any books, supplies or equipment necessary to do the study and research. All or part of a fellowship may be taxable if it's payment for teaching or other services. Any money used for room and board, travel or other expenses not required by the college or university is taxable too. The taxable portion counts as gross income on tax returns.