how an honorarium works
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 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 1the 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 honorariumlike 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 2even 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 3 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 4 if honoraria are not part of a speaker s regular business they are reported as other income on the 1040 document 5 an honorarium may be subject to self employment tax as well 6a 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 7