In general, are fellowships which are granted to individual researchers, but do not constitute salary and are not held in a personal bank account, considered taxable for US passport holders?
For example, if a US national has a postdoctoral contract which gives them an income, and they are awarded with a supplementary fellowship for travel and research expenses, does the researcher need to declare only their salary when they file income taxes, or do they need to declare salary + the fellowship?
I understand that fellowships can now be considered taxable under some conditions:
You must include in gross income:
Amounts used for incidental expenses, such as room and board, travel, and optional equipment. Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.
However, it is not clear how it would apply in this case.
I'm also confused as to the specific circumstances of a US national who is working outside of the US in this situation (postdoc salary and fellowship are both of non-American origin). I know that they must file their taxes in any case, but that their tax payment is usually 0 due to the Foreign Earned Income Exclusion. If this researcher's salary is ~$50k/yr and the fellowship is ~$50k/yr, this puts the researcher near the exclusion limit if the fellowship is also taxable.
It would seem that if the fellowship is awarded to somebody for purposes other than obtaining a degree, the fellowship is indeed taxable. However this seems like a very undue burden for a researcher, where getting fellowships and grant funding is considered vital for their success. Am I missing something?