A Fellowship is payment for which there is no service requirement. It is intended to aide an individual in the pursuit of study or research. Generally, whether the amount is tax free or taxable depends on the expenses paid with the amount received and whether the student is a degree candidate or not. For more details, please see IRS Publication 970
For US citizens and Foreign Nationals in resident alien tax status:
Fellowships received from University Payroll (UP) may be taxable income on your tax return although taxes are not withheld and the income is not reported to the appropriate taxing authorities by UP. The fellowship recipient is responsible for reporting the taxable portion of the fellowship on their tax return.
For Foreign Nationals in nonresident alien tax status:
Fellowships received by Foreign Nationals in nonresident alien tax status are taxed at 14% for Federal Income Tax purposes – 0% if there is an applicable treaty benefit – and reported to the IRS on Form 1042S.