So I’ve been giving @Photomancer a seemingly hard time about Honorariums, For Pay Classes and Taxes. Thanks for being so open about this David as my concerns and questions seem to be answered to my needs.
So I’m sure many of you know about the Honorarium System but, when I say For Pay Classes I might of lost a few of you. For Pay Classes are the classes that we charge an additional fee that is paid directly to the teacher. A great example of this is the HAAS Class put on by Brian which has a $75 ticket price. DMS doesn’t take any of the money from that $75 ticket, they receive the funds after processing fees and pass it strait through to the teacher.
As I work in print sales, we have to charge sales taxes on all sales and I wondered if Teacher’s would have to charge sales tax on their class as they are providing a service in teaching and by charging the fee are a private contractor. After some reading it seems as though they do not have to charge sales tax for teaching services. Source: Sales Tax FAQ & Taxable Services PDF
But, and this is a BIG BUTT. If you are charging for materials used in this class it does seem that you are required to charge sales tax on those as they are a tangible/personal property. Here is a link to the Texas State University Sales Tax Manual as a nice reference.
Lastly, don’t forget about Income tax. If you receive payment over the year in excess of $600 you are supposed to claim it on your federal taxes. Also, David had a few concerns about FICA requirement and the money from classes that I hope he adds as I’m not prepared to talk to that point yet. Thanks again David for the help and patience on this.
###DMS FTW