There are a few issues going on here. Here are my understanding of the rules.

First, fellowships and stipends are taxable to the extent they exceed the amount you spend for tuition. Check out IRS Publication 970, Tax Benefits for Education, available at www.irs.gov. So I don't agree that this income is not subject to federal income taxes.

The second issue is whether this income is subject to social security and Medicare taxes. Generally, this income is viewed more as an allowance than as compensation for services - which means it's exempt for social security and Medicare taxes.

I hope this helps point you in the right direction.

Zip Code: aschwartz@mdtaxes.com

Thanks for you help VL

Zip Code: VLeswing@verizon.net