Church Admin Inc.
Understanding Stipends, Honorariums, W-2, and 1099 Payments
A Reference Guide for Church Leaders and Administrators
What Is a Stipend?
A stipend is a fixed amount of money provided to a volunteer to show appreciation and/or help cover some of their personal costs. It is not considered payment for labor in the traditional employment sense. Stipends are commonly used in churches, nonprofits, and academic settings to recognize individuals who contribute significant time and energy without being on staff.
Several churches use stipends for volunteers who do a large amount of work or need assistance covering costs — things like transportation, meals, or equipment. The amount is completely up to the church; the IRS has no prescribed threshold for what a stipend should be. What matters is the clarity of the relationship.
Key Point | The word "stipend" does not define a tax classification. A stipend can be taxable — and typically is. The tax form it generates depends on whether the recipient is a volunteer, an employee, or a contractor. |
The Three Payment Categories
W-2 Employee (Not recommended for a Stipend)
A W-2 employee is someone the church employs in a more traditional sense — the church directs not just the outcome of the work, but how and when the work gets done. Most paid church staff fall into this category.
- The church withholds federal and state income taxes
- The church pays its share of FICA (Social Security and Medicare — 7.65%)
- A W-2 is issued at year-end
- Labor laws apply: minimum wage, overtime, and related protections
1099 Independent Contractor (Recommended for a Stipend)
A 1099 contractor is engaged for a specific result, but controls how they deliver it. They typically work for multiple clients, use their own equipment, and set their own schedule. Many AV technicians, sound engineers, and other ministry support workers are paid this way.
- The church pays the agreed amount in full — no withholding
- If total payments reach $600 or more in a calendar year, a 1099-NEC must be issued
- The contractor pays their own self-employment taxes
- No employer FICA obligation for the church
Important | Calling someone a "1099 contractor" does not automatically make them one. If the church controls how and when the work is done, requires the person to be there every week, and provides all the equipment, the IRS may consider that person an employee. Misclassification can result in back taxes, penalties, and interest. |
Volunteer Stipend
A volunteer stipend sits in its own category. The person is a volunteer — they are not being hired or contracted as a worker. The stipend is a gesture of appreciation or cost assistance, not a wage. This distinction matters both legally and relationally.
- The stipend amount is entirely at the church’s discretion
- The IRS still considers this taxable income to the recipient
- Whether it is reported on a W-2 or 1099 depends on how the overall relationship is classified
- Labor laws generally do not apply if the volunteer status is genuine and clearly established
Best Practice | The church and the individual should be mutually clear that the person is serving as a volunteer, not as an employee or contractor. Document this understanding. A brief letter or acknowledgment referencing the volunteer relationship is a simple and helpful step. |
Comparison at a Glance
| W-2 Employee | 1099 Contractor | Volunteer Stipend |
Tax withholding | Yes — employer withholds | No — self-reported | Taxable; form depends on classification |
Who controls the work | Church directs how work is done | Person controls how; church sets result | Person is volunteer; church shows appreciation |
Employer FICA | Church pays 7.65% | None (person pays self-employment tax) | None if true volunteer |
Year-end form | W-2 | 1099-NEC (if $600+) | W-2 or 1099-NEC depending on relationship |
Labor law applies? | Yes — minimum wage, overtime | Generally no | Generally no if volunteer status is clear |
Common examples | Staff, part-time employees | AV techs (if properly classified), guest speakers | Volunteers with cost reimbursement or recognition |
A Word on Honorariums
An honorarium is a one-time, non-recurring payment given to someone for a service they are not regularly contracted to perform — a guest speaker, a musician for a special service, a workshop leader. Honorariums are taxable income to the recipient but are generally used for single-occasion payments rather than ongoing arrangements.
- If the total paid to one individual is under $600 in a year, no 1099 is required (though the income is still taxable to them)
- If payments reach $600 or more, a 1099-NEC should be issued
- Honorariums should not be used for recurring roles — those should be properly classified
Recommended Language
Retiring the standalone use of “stipend” as a classification term reduces confusion. Consider these alternatives:
Situation | Better Language |
A role paid as contractor, one time or recurring | Contractor payment / 1099 contractor fee |
Minister housing support | Housing allowance (designated by board action) |
Volunteer receiving appreciation funds or cost coverage | Volunteer stipend (make clear this is not pay for labor) |
Guest speaker or one-time musician | Honorarium |
Part-time recurring paid worker | Part-time wages (W-2) |
This document is provided as general guidance by Church Admin Inc. and does not constitute legal or tax advice. Consult your CPA or legal counsel for situation-specific guidance.
churchadm.com • Questions? Contact the Church Admin team.
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