An honorarium is a one-time gratuitous payment made as a gesture of goodwill and expression of appreciation for individuals who are speakers or contributors in special Stanford events (e.g., symposia, lecture series, or professional conventions). Honoraria may be paid for in-person or virtual activities.
An honorarium cannot be paid when:
- The individual requests, requires, or negotiates a payment. This is considered a purchase of a professional service. In these instances, the individual must first be set up as a supplier and their services must be procured through the contract process.
- The honorarium is being used as a promise or as enticement for the individual to participate.
- The individual is a foreign visitor whose visa status does not allow for honoraria to be paid. Learn more about Inviting and Paying Foreign Visitors.
Please note: Under certain limited circumstances, and only with pre-approval, an honorarium may be paid to an organization. For consultation and pre-approval, which must occur before the event takes place, the department should submit a support request.
The process and payment methods for paying honoraria differ depending on whether the individual is employed by Stanford or not. All honoraria payments are subject to taxation.
The following terms are used by the university to determine payment method and taxation:
- "U.S. payee" - someone who is a U.S. citizen or a U.S. resident for U.S. tax purposes
- "Non-U.S. payee" - someone who is neither a U.S. citizen nor a U.S. resident for U.S. tax purposes
Individuals who are employed by Stanford are only eligible to receive an honorarium if the speaking engagement or contribution is not included as part of their typical job duties and is pre-approved by the employee's school or unit. If the employee is adjunct faculty, consult with Faculty Affairs to confirm if an honorarium is allowed.
Refer to the table below for the process, requirements, and tax implications.
| Type of Payment and Process | Tax Implications |
|---|---|
|
Honorarium The department that is paying the individual should contact their HR administrator to request a one-time or supplemental payment, which would be added to the employee’s next scheduled paycheck. |
Honoraria payments are tax reportable and will be added to the employee’s Form W-2 at year end. See the Tax Information for Honoraria section below for more information. |
|
Travel Expenses Eligible expenses may be paid with a department Travel Card or, if the employee pays for travel expenses with personal funds, they can be reimbursed to the employee by creating an expense report for SU payees. Include in the business purpose that these travel expenses are related to the activity. |
Eligible travel expense reimbursements, where Stanford has a business purpose such as inviting an expert speaker to a conference, are not tax reportable when expenses are substantiated within 60 days after the end of travel. |
When honoraria are paid to individuals who are not employed by Stanford, additional steps are required to ensure compliance with federal, state, and university policies.
| Payment Process | Tax Implications |
|---|---|
|
Honorarium
|
Honoraria payments are tax reportable, with varying implications dependent upon factors such as amounts and country/state residency. See tax information in the section below. |
|
Travel Expenses Note: An individual Travel Card is intended for use by the individual to whom it has been issued only, so it may not be used to pay for visitor travel expenses. If the payment request meets the criteria and threshold, preparers can use Digital Payments to reimburse domestic travel expenses for U.S. citizens or residents. Digital Payments are a quick and efficient way to pay U.S. bank accounts using a secure nationwide digital payment network. If Digital Payments cannot be used, then the payment can be processed through an expense report for non-SU payees (visitor reimbursement). If the payee has not yet been set up in the database, the expense report process will facilitate entering the needed information to create a visitor payee setup request. The payee will also need to take action to complete the payee setup process before the reimbursement can be completely processed. |
All visitor travel expenses should be submitted within 60 days of the completion of travel. |
Honoraria payments are tax reportable, with varying tax implications that depend on factors such as amounts, payee country/state residency, and location of the activity (such as the country or state where a service is performed).
- Federal Tax:
- U.S. payees: There is no federal tax withholding on a payment to an individual not employed by Stanford if a Tax ID Number (TIN) is on file (in the payee supplier record) with Stanford at the time of payment.
- Stanford will issue an IRS Form 1099-NEC for total payments that equal $600 or more in a calendar year.
- For employees, all honoraria payments are taxable as wages through Payroll and reported on Form W-2.
- Non-U.S. payees: Stanford is required to withhold from "U.S. source" income payments made to non-U.S. payees at the rate of 30%, absent a claim of a tax treaty benefit. Stanford will issue an IRS Form 1042-S for total payments regardless of the total amount in a calendar year. Note: It is important to indicate the location of the activity in the transaction details or supporting documentation (such as the country or state where a service is performed) so that proper tax treatment is determined.
- The payee can claim an exemption from federal tax withholding via the tax treaty benefit process by filing IRS Form 8233. The 8233 tax treaty form requires the payee to have an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). If they do not possess one, withholding is required. A properly completed Form 8233 should be on file with Stanford before payment is made. The payee may claim the tax treaty directly on their tax return at year end even if they are not able to claim it with the university at time of payment.
- U.S. payees: There is no federal tax withholding on a payment to an individual not employed by Stanford if a Tax ID Number (TIN) is on file (in the payee supplier record) with Stanford at the time of payment.
- California State Tax: Non-residents of California who receive honoraria and come to California to perform a service are subject to California withholding at a rate of 7% for payments over $1,500 in a calendar year. Stanford will provide CA Form 592-B to payees, which shows the total amount withheld and reported for the tax year. This state tax may be assessed in addition to federal tax, which would total to 37% in those cases.
- California does not conform to federal law relating to income protected by U.S. tax treaties. For more information, refer to withholding on non-residents on the State of California Franchise Tax Board website.
Option to “gross up” payment
In certain situations, departments have the option, at their discretion and depending on department budgetary limits, to increase the honorarium amount to the payee in order to factor in the amount of taxes that will be withheld. Gross-up payments should be considered carefully, as a gross-up payment will result in an additional expense for the department and, potentially, the payee will receive the funds in the form of a tax refund when they file their required year-end tax return. In these cases, the amount that will be tax reportable to the individual is the total gross-up amount paid. A payment may be taxed at either the federal or state level, or both, depending on the amount and the residency (U.S. and California) of the payee.
| Example: The intended honorarium payment is $100. The expected federal tax is 30% and there is no state tax. | |
| Without gross up | If the honorarium payment is $100 and is taxed at 30% for a non-U.S. payee, the payee receives $70. |
| Example: The intended honorarium payment is $2,000. In the applicable rows below, the expected federal tax is 30% and/or the state tax is 7%. | |
| Federal gross up |
Formula: [Net Amount / (1 – Tax Rate)] = Gross up The department may elect to pay $2,857.14. The 30% withholding equals $857.14, leaving $2,000 “net amount” remaining for the payee. Example: [$2,000 / (1-.30)] = $2,857.14 (the total amount tax reportable and charged to the department) |
| State gross up |
Formula: [Net Amount / (1 – Tax Rate)] = Gross up The department may elect to pay $2,150.54. The 7% withholding equals $150.54, leaving $2,000 “net amount” remaining for the payee. Example: [$2,000/(1-.07)] = $2,150.54 (the total amount tax reportable and charged to the department) |
| Federal and State gross up |
Formula: Gross up = [Net Amount / (1 – Tax Rate)] The department may elect to pay $3,174.60. The 30% and 7% withholding equals $1,174.60, leaving $2,000 “net amount” remaining for the payee. Example: [$2,000/(1-.37)] = $3,174.60 (the total amount tax reportable and charged to the department) |
