The Nonprofit FAQ

Are 'stipends' wages?

Someone asked in CharityLaw (a service of CharityChannel.com: As an incentive for their participation, Teens are given a "stipend" of $50 to $75 per week. The most any 1 teen is "rewarded" is $150 for the season of 2-weeks. Would the IRS view these as "salaries"? Is there some threshold of where an employer isn't required to report these "earnings" so long as they don't exceed "N dollars" to any one individual? Joseph R. Irvine of Columbus, Ohio, answered: Unfortunately, there is no de minimis amount that can be paid in wages without filing a W-2. The "stipends" sound like salary to me. I assume they are being paid in exchange for services. And the original inquirer continued: Thanks for the reply above. I did some research as well with IRS, and have added insight that "stipends" in my prior viewpoint were more correctly wages paid, however in an amount that wouldn't have met the threshold for withholding in any case. In spite of that, seems like they still require proper reporting, so I'm doing a bit of backtracking on filing late 941's, W-2's, and learning lots more about running a not-for-profit! Plus, it's probably worth adding: If a person is paid a fee for occasional work (sometimes these will be called "honoraria"), it is the recipient's responsibility to report the income on their personal income tax return and pay the taxes due. If the amount is more than $600, then a 1099 must be filed with the IRS by the paying organization to report the payment. (An easy way to do a few 1099s is to use a service like FileTaxes.com.) Posted 4/26/01 -- PB