23 Apr How to define honoraria income
Honoraria income for clergy refers to payments received for services where a set fee is not legally or traditionally required. These services often include weddings, funerals, baptisms, and guest speaking engagements. Here are some key points to understand:
Definition and Nature
- Honorarium: A voluntary payment given for services that custom or propriety forbids a price to be set. It is typically unexpected and not required.
- Examples: Clergy might receive honoraria for officiating ceremonies, delivering speeches, or performing other religious services.
Tax Treatment
- Taxable Income: The IRS considers honoraria taxable income. Regardless of whether a 1099-MISC form is issued, the payment must be reported on the tax return.
- Reporting: Payments over $600 require the payer to issue a 1099-MISC form. Even if the amount is less than $600, it should still be reported as income.
- Self-Employment Income: For clergy, honoraria are often treated as self-employment income, meaning they can be reported on Schedule C, allowing for potential deductions of related expenses.
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.