Person X is the unpaid Executive Director of a small nonprofit organization in Illinois. She’s requested $500 to help cover personal expenses.
Would this be considered a stipend? Should she invoice the nonprofit? What issues need to be considered in order to do this in accordance with any tax or legal parameters?
The issue is that the non profit isn’t big enough to pay a salary. However, it could compensate something "here and there" while working on its over all stability.
No unusual tax requirements for the nonprofit. If they pay a stipend, salary, or honorarium to anyone, the individual who receives it must count it as ‘income" and they must include it as such on their income tax return. If that person can apply any deductions to that income depends on their circumstances.
She cannot receive anything for personal expenses. That is illegal and the nonprofit will lose its tax exemption.
She may be reimbursed for costs of operating the nonprofit such as mailings, telephone or mileage as long as the non profit’s business was being conducted.
References :
No unusual tax requirements for the nonprofit. If they pay a stipend, salary, or honorarium to anyone, the individual who receives it must count it as ‘income" and they must include it as such on their income tax return. If that person can apply any deductions to that income depends on their circumstances.
References :