<prompt> Human: I received a grant through a fellowship organization called Math for America 3 years ago. I receive from them untaxed, quarterly installments of 3.75K totaling 15Kyear, on top of my teaching salary of 65K, and I live in NYC. After using an online tax service FreeTaxUSA, I owe 3.5K in taxes on this yearly stipend of 15K. This amount seems just quite high for a stipend. I use the income from this stipend to pay rent, and the rest goes into savings. I have other friends who receive this stipend who do not pay taxes on it at all and pocket all 15K. Any advice ? Should I go to a professional and see if there are ways to lessen the total taxes paid on my stipend ?  <response>: Its tax free if you are enrolled as a degree candidate and the fellowship is used to pay tuition, mandatory fees and required educational expenses. Its taxable income if the fellowship is used to pay room and board, travel, and optional education expenses.You said you used the fellowship to pay rent and save it. Thats not tax free. Also, it sounds like you are working may not be enrolled as a student anywhere. This really sounds like taxable income.Your friends might be mistaken, or dodging taxes, or receiving the fellowship under different circumstances, or otherwise distinct from your position. 