What Is an Honorarium?

An honorarium is a voluntary payment that is given to a person for services for which fees are not legally or traditionally re𓆏quired.

Honoraria are typically used to help cover costs for volunteers or guest speakers and may be considered taxable income. For example, when a guest makes a speech at a conference, they might receive an honorarium to cover 澳洲幸运5官方开奖结果体彩网:travel expenses.

How an Honorarium Works

An honorarium is a different type of payment than a per diem, which is a daily a🐬llowance paid to employees or consultants to cover business trip expenses, like a ho꧋tel stay, travel, and food.

An honorarium is often provided for services meriting compensation that propriety preven𓆉ts from requesting. For example, a world-renowned professor gives 🍌a speech to a scholarly foundation, and the foundation provides the professor with an honorarium for their service.

An honorarium is determined by the amount of work put into creating and delivering a service, such as a speech. For example, one hour of speaking may entail three days of effort. In addition, delivering a speech on multiple occasions requires hours of practi🌠cing and improving before each presentation.

The speaker’s travel and recovery time require consideration as well. Following up on 🐷the example above, how can one hour of speaking require three days of work? There can be one day for practicing 🔜and improving the speech, another day for travel and deliverance, and a third day for getting back into the speaker’s normal routine. Those three days cannot be used for making money through other methods, justifying an honorarium.

Tax Treatment of an Honorarium

Like other forms of income, an honorarium is taxable. Organizations paying honoraria report them to both the speaker and the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) on a 澳洲幸运5官方开奖结果体彩网:1099-MISC form if compensation is $600 or greater in one calendar year.

Even if a speaker does not receive Form 1099, they still must report the honorarium as income. There are rare exceptions to the rule. For example, the IRS allows ministers tax 澳洲幸运5官方开奖结果体彩网:exemption on honoraria paid for giving speeches or performing weddings, baptisms, or other activities. The honoraria may be conside𓆏red g🔥ifts rather than taxable compensation if the intent was giving the honoraria as such.

An honorarium is considered self-employment income and is typically reported with related expenses on Schedule C of IRS Form 1040 for a 澳洲幸运5官方开奖结果体彩网:tax return. For example, the speaker may deduct the cost of their unreimbursed plane ticket and lodging, having speech materials printed, maintaining a website, and using a cellphone for business. If honoraria are not part of a speaker’s regular business, they are reported as other income on the 1040 document. An honorarium may be subject to 澳洲幸运5官方开奖结果体彩网:self-employment tax as well.

A speaker traveling out of state and earning an honorarium can create additional taxation. Many states consider giving a speech within their borders a nexus, letting the state claim taxes against the speaker’s income. As a result, a speaker may end up filing and paying multiple state tax returns.

The Bottom Line

An honorarium is given to a person for services for which fees are not legally or traditionally required. It is a voluntary payment that may be considered taxable income.