Honorarium: Definition and Tax Treatment

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 required. 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 travel expenses.

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

How an Honorarium Works

An honorarium is often provided for services meriting compensation that propriety prevents 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 practicing and improving before each presentation.

Money made from honoraria is usually not considered tax-free income.

The speaker’s travel and recovery time require consideration as well. For example, one hour of speaking may require three days of work: one day for practicing and improving the speech, another day for travel and deliverance and a third for getting back into the speaker’s normal routine. Those three days cannot be used for making money through other methods, justifying an honorarium.

Key Takeaways

  • An honorarium is a payment given to guest speakers who don't charge a fee for their services.
  • Honoraria are often used in academic settings by universities.
  • A guest speaker is allowed to return an honorarium and pay out of pocket.
  • An honorarium is considered self-employment income by the IRS and is usually taxed accordingly.

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 Internal Revenue Service (IRS) on a 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 exemption on honoraria paid for giving speeches or performing weddings, baptisms, or other activities. The honoraria may be considered gifts 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 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 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.

Article Sources
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  1. Internal Revenue Service. "Publication 525: Taxable and Nontaxable Income," Page 3. Accessed June 23, 2021.

  2. Internal Revenue Service. "Instructions for Forms 1099-MISC and 1099-NEC (2021)," Pages 1-2. Accessed June 23, 2021.

  3. Internal Revenue Service. "Topic No. 417 Earnings for Clergy." Accessed June 23, 2021.

  4. Internal Revenue Service. "2020 Instructions for Schedule C (2020)," Pages 9-10. Accessed June 23, 2021.

  5. Internal Revenue Service. "Form 1040 (2020)." Accessed June 22, 2021.

  6. Internal Revenue Service. "Self-Employment Tax (Social Security and Medicare Taxes)." Accessed June 23, 2021.

  7. Harvard University. "Honorarium." Accessed June 23, 2021.

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