Paying Honoraria

In exceptional and uncommon circumstances, a department may elect to provide a Stanford student an honorarium as a one-time token of appreciation for their participation or contribution to a special Stanford activity or event.

A student honorarium can be paid only for the following situations:

• A student musician participates in a musical performance, such as a student providing DJing entertainment or a student band providing music for a Stanford event.
• A student is invited to speak at a special Stanford event or conference or participate in a panel discussion, such as a student speaking at Democracy Day, a special annual Stanford event.

Note that other options, such as a tangible gift, may be more appropriate if token recognition is warranted. Additional resources about paying Stanford students are available by visiting the Student Stipend Policy page under Stanford Financial Aid.

Department transaction preparers should follow the steps outlined below to ensure the proper and timely processing of payments.

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. 

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.
    • For U.S. payees that are not employees, 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: Income received for services performed in the U.S. by a non-U.S. payee is generally considered "U.S. source" and is subject to withholding and reporting. Virtual Services performed in the payee's home country are not subject to this withholding. 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.
    • U.S. source: If a non-U.S. payee traveled to Stanford to perform services (i.e., the individual received an honorarium for speaking at an event), the income received by the non-U.S. payee is considered ‘U.S. source' and is subject to withholding and reporting. 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. 
      • 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.
    • Non-U.S. source: If a non-U.S. payee performed the services in their home country and did not travel to the U.S. or Stanford (i.e., the individual spoke virtually via Zoom), the income is considered non-U.S. source and not subject to withholding and reporting.
• 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.