You may have heard the term “honoraria” refer to weddings, funerals, baptisms, or any number of other activities. But where does the term honoraria actually come from? The dictionary definition of Honoraria is “a payment for a service which custom or propriety forbids a price to be set.” There is usually no expectation or requirement of payment when completing these services, so the amount received is often a surprise.
If you receive honoraria, you must report it on your tax return. There is a common misconception that a payment under $600 does not need to be reported. If an organization or an individual pays you over $600, they must issue you a 1099-MISC and provide a copy to the IRS. Regardless of whether you receive a 1099-MISC or not, the payment should be reported on your tax return.
Honoraria can easily be reported in one of two ways- it can either be reported as other income, or it can be listed as income on a schedule C. If you list it on Schedule C, you can also potentially deduct any expenses that you paid out of pocket in order to perform the service and potentially use the “qualified business income deduction”.
If you are still unsure how to report honoraria, don’t stress. Clergy Financial Resources is here to assist. With our seasoned tax professionals, we can file returns for this year or for previous years. For more information on getting started on your return with CFR, visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/ for more details.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101