Tax question about honoraria
June 3, 2009 8:24 PM Subscribe
Tax question about honoraria
I recently made a presentation as part of my employer's marketing efforts. I was not expecting it, but the third-party company that managed the presentation sent me an honorarium in the form of a check for $250 payable to me (not my employer).
Ethically, I disclosed it to my employer, since I had already been paid for the time and effort involved. Being nice, they want to let me keep it, but...
...my employer can't figure out whether it should be processed through payroll, or whether it should just be ignored. They can't treat it as a de minimis item, due to its amount.
...the third-party company will most likely send me a 1099MISC anyway, so I am not completely clear how my company can then put it through on my W2.
Thoughts, O hive mind?
What would the correct thing be to do? Assuming, of course, you have fulfilled your ethical obligations of disclosing the matter. And assuming my employer wants to give me the benefit if they can, without it costing them anything.
I recently made a presentation as part of my employer's marketing efforts. I was not expecting it, but the third-party company that managed the presentation sent me an honorarium in the form of a check for $250 payable to me (not my employer).
Ethically, I disclosed it to my employer, since I had already been paid for the time and effort involved. Being nice, they want to let me keep it, but...
...my employer can't figure out whether it should be processed through payroll, or whether it should just be ignored. They can't treat it as a de minimis item, due to its amount.
...the third-party company will most likely send me a 1099MISC anyway, so I am not completely clear how my company can then put it through on my W2.
Thoughts, O hive mind?
What would the correct thing be to do? Assuming, of course, you have fulfilled your ethical obligations of disclosing the matter. And assuming my employer wants to give me the benefit if they can, without it costing them anything.
I have been the recipient of several honoraria in the past while employed by a large company. I disclosed it to my company, and they agreed that I could keep it. Thus endeth their involvement. The third-party company that paid me sent me a 1099. Simple as that.
Bottom line: your company is not involved in the transaction in any way except that you presumably made the presentation during work hours, but that does not mean that they should get involved tax-wise. Employer should give you a W-2 that reflects what they actually paid you, and the other company should give you a 1099 that reflects what they actually paid you.
posted by bedhead at 9:51 PM on June 3, 2009
Bottom line: your company is not involved in the transaction in any way except that you presumably made the presentation during work hours, but that does not mean that they should get involved tax-wise. Employer should give you a W-2 that reflects what they actually paid you, and the other company should give you a 1099 that reflects what they actually paid you.
posted by bedhead at 9:51 PM on June 3, 2009
It's under $600, so they likely won't bother 1099ing you for it.
posted by desuetude at 10:37 PM on June 3, 2009
posted by desuetude at 10:37 PM on June 3, 2009
I'm no tax expert, but I do not think this income gets folded into your W2. It should appear on line 21 of the 1040 as "1099-MISC".
posted by fatllama at 1:00 AM on June 4, 2009
posted by fatllama at 1:00 AM on June 4, 2009
IANACPA, and this is not tax advice...
Seconding fatllama and desuetude, with the caveat that you can become subject to self employment tax on non-W2 earnings. Probably only if you make more than $400 in a given year. If you have travel or business expenses related to those earnings, you may be able to deduct them.
posted by BrotherCaine at 2:11 AM on June 4, 2009
Seconding fatllama and desuetude, with the caveat that you can become subject to self employment tax on non-W2 earnings. Probably only if you make more than $400 in a given year. If you have travel or business expenses related to those earnings, you may be able to deduct them.
posted by BrotherCaine at 2:11 AM on June 4, 2009
In no circumstances should that money funnel through your employer.
posted by BrotherCaine at 2:12 AM on June 4, 2009
posted by BrotherCaine at 2:12 AM on June 4, 2009
An honorarium will get you a tax document from each organization that gives you one. The commenters above are right, your employer should not be involved. If you think that you might be giving talks regularly or in many different states in the future however, it's worth seeing a tax attorney; you might want to create your own corporation.
posted by B-squared at 5:38 AM on June 4, 2009
posted by B-squared at 5:38 AM on June 4, 2009
Did you have any travel expenses for that presentation that this might be construed to reimburse?
posted by ROU_Xenophobe at 5:59 AM on June 4, 2009
posted by ROU_Xenophobe at 5:59 AM on June 4, 2009
I get honoraria a lot and people are generally correct. This has nothing to do with your employer once they say it's okay for you to keep the money. At that point it becomes your self-employement income. If you made more than 1099 in a year you would need to file an dpay taxes on it. Self-employment tax is higher than regular tax [well it isn't but you need to also pay your own social security on it, which in the US is about 12% and is normally paid by your employer]. I assume I'll pay about 25% of my honoraria money back in taxes.
BUT as ROU-X says, if you have expenses associated with earning that money [such as travel, meals, some other things, postage....] you can deduct that from the amount you got paid before you are taxed on it which is pretty cool. For such a small amount of money you're not going to get a 1099 (pretty sure the limit is $600) and you don't have to pay (if under $400 again pretty sure, but thi sis cumulative, so if you make $250 three tiems I think you do need to pay). Any basic tax program can help you out with this, it's not likely something you need to consult a tax person about unless your finaincial system is usually really complicated.
posted by jessamyn at 7:04 AM on June 4, 2009
BUT as ROU-X says, if you have expenses associated with earning that money [such as travel, meals, some other things, postage....] you can deduct that from the amount you got paid before you are taxed on it which is pretty cool. For such a small amount of money you're not going to get a 1099 (pretty sure the limit is $600) and you don't have to pay (if under $400 again pretty sure, but thi sis cumulative, so if you make $250 three tiems I think you do need to pay). Any basic tax program can help you out with this, it's not likely something you need to consult a tax person about unless your finaincial system is usually really complicated.
posted by jessamyn at 7:04 AM on June 4, 2009
Response by poster: Thanks, all. I had concluded that this was pretty much the situation. It's now a matter of convincing my employer.
Is there anything you can point to that convinces my employer that it shouldn't go through their payroll?
The check was mailed to me, in my name, but to my work address.
posted by blue_wardrobe at 10:52 AM on June 4, 2009
Is there anything you can point to that convinces my employer that it shouldn't go through their payroll?
The check was mailed to me, in my name, but to my work address.
posted by blue_wardrobe at 10:52 AM on June 4, 2009
Is there anything you can point to that convinces my employer that it shouldn't go through their payroll?
Point to your name in the "pay to" field? Politely, of course.
You can contact the organization that issued it for clarification. I'm sure they'll be happy to send a note explaining that the monies are an honorarium, not payment for services rendered, paid to your directly independent of your relationship with your employer, and you'll be issued a 1099 if appropriate.
I work for a non-profit, we issue honoraria to speakers; this is a not-uncommon issue.
posted by desuetude at 11:26 AM on June 4, 2009
Point to your name in the "pay to" field? Politely, of course.
You can contact the organization that issued it for clarification. I'm sure they'll be happy to send a note explaining that the monies are an honorarium, not payment for services rendered, paid to your directly independent of your relationship with your employer, and you'll be issued a 1099 if appropriate.
I work for a non-profit, we issue honoraria to speakers; this is a not-uncommon issue.
posted by desuetude at 11:26 AM on June 4, 2009
Is there anything you can point to that convinces my employer that it shouldn't go through their payroll?
Because they paid you, not your employer, they are going to send you the tax forms for that $250. If it also goes through your employer's payroll they will be taxing that same money again before they give it to you. That makes no sense.
If for some reason they are being bizarre and need to funnel the money through their payroll -- which as other people have stated they should not be doing -- contact the people who gave you the honorarium and make them send the check to your employer without your name on the "pay to the order of" line.
posted by jessamyn at 2:56 PM on June 4, 2009
Because they paid you, not your employer, they are going to send you the tax forms for that $250. If it also goes through your employer's payroll they will be taxing that same money again before they give it to you. That makes no sense.
If for some reason they are being bizarre and need to funnel the money through their payroll -- which as other people have stated they should not be doing -- contact the people who gave you the honorarium and make them send the check to your employer without your name on the "pay to the order of" line.
posted by jessamyn at 2:56 PM on June 4, 2009
This thread is closed to new comments.
Consider an alternate scenario. If a third-party company just mailed you a check for $250 (for no reason, or for just being a decent person), your employer would never know or care. Why is this any different?
posted by saeculorum at 9:33 PM on June 3, 2009