We had students which recieved stipends for fellowships last year and
they questioned whether they were to be taxed.  I was told by our
Payroll office that these stipends are taxed at the federal level.  If
the student feels they should not be taxed, they must submit
documentation to the IRS showing the stipend was spent on educational
expenses to receive a refund of this tax.  You should be able to find
the information in Publication 520, as mentioned by Robert.  For PA,
stipends are not taxed at the state level.

Good luck
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Deanne L. Hoenscheid                    Phone:  (610)758-3863
Materials Research Center               Fax:    (610)758-3526
Lehigh University                               E-mail: xxxxxx@lehigh.edu
462 Whitaker Lab
5 E. Packer Avenue
Bethlehem, PA  18015
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