Consulting/Honoraria/Guest Speaker Fees
Service income, classified as independent contractor
An honorarium is a voluntary payment, or something in value, given to a person in recognition of a special or distinguished service in an academic activity (e.g. a guest lecture, serving on a panel discussion) for which no fixed fee is set. An honorarium payment is made as a gesture to thank the person rendering the service. The MIT department or office hosting the individual determines whether an honorarium will be offered and the amount of the payment.
A 30 percent withholding tax rate applies in the absence of claimed tax treaty benefits.
Royalty/Prize/Award
Royalty: A royalty payment is a payment for the right to use some form of intangible property (e.g. copyright, patent).
Prizes and awards are amounts paid in recognition of an outstanding achievement or winnings in a competition, raffle, or other contest. When paying a prize or award, it is generally for a past performance. However, if the amount is intended for use in future research or study, the payment may be more properly categorized as a scholarship or fellowship.
- Exceptions – Tangible personal property given to employee for length of service or safety. See the restrictions at https://www.irs.gov/pub/irs-pdf/p5137.pdf.
- Cash or gift cards are always taxable.
A 30 percent withholding tax rate applies in the absence of claimed tax treaty benefits.
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