The dictionary defines honoraria as “a payment given for professional services that are normally rendered without charge” or “a payment in recognition of acts for which custom or propriety forbids a price to be set”. This would include payments made for things like weddings, baptisms, funerals, pulpit supply or speaking engagements. In most situations, it would be rude to ask for a price, so any payment is totally up to the person who asked for the service.
Regardless of whether the honoraria comes in the form of a check or cash, it is considered taxable income to the recipient. Regardless of how much you get paid, it must be reported on your income tax return.
If you don’t want any money from performing honoraria, you can politely decline or ask that the money be donated to a church or charitable organization. Do not take the money or cash the check and donate it for them later; If you do, IRS will have considered you as receiving it as income and you will be on the hook for the resulting income tax, even if you immediately donate it.
Since most honoraria payments are informal, you will rarely receive a 1099-MISC at the end of the year for what you earned. It is a good habit to write down honoraria in a logbook as you earn it throughout the year, so you don’t have to struggle and search through your bank account at tax time to try to recall what you actually earned.
Did you know that you can deduct expenses related to honoraria? Clergy Financial helps make sure that you get your related deductions when you file your 1040 return. For more information on 1040 preparation services, visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/ today.< Back
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.
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