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wm030303
wm030303, Enrolled Agent
Category: Tax
Satisfied Customers: 112
Experience:  I am both a CPA and EA with over 30 years of experience in solving tax related issues.
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I donated eggs to a woman in 2011 through a fertility clinic.

Resolved Question:

I donated eggs to a woman in 2011 through a fertility clinic. Because it is illegal to sell genetic material, I was compensated for my mileage, gas, medications and time for what was a painful and emotionally draining procedure. I was told I would receive a 1099-MISC at the end of the year, but am uncertain whether this kind of income can be taxed. It's similar to receiving compensation from an automobile accident for both physical and emotional damages. How does one go about filing this kind of information to the IRS, since the IRS doesn't know how I receive my 1099 income (only the amount I received)? Self-employment tax is highly taxed, and while I'm willing to pay some taxes on my procedure, I can't really justify the 15% they're asking for.

I called the IRS, and even they couldn't help me. They told me it was beyond the scope of their knowledge and that I would have to speak to a tax attorney or professional.

Thanks for the advice.
Submitted: 5 years ago.
Category: Tax
Expert:  wm030303 replied 5 years ago.

wm030303 :

Hello and thanks for using Just Answer.

Customer:

Hi, thanks for your time.

wm030303 :

If you were only compensated for reimbursement for your expenses then you would be able to offset the 1099 income with your expenses and not need to pay tax on this income.

Customer:

I don't have receipts for what expenses I did have, but the compensation was more than that due to the surgery and recovery time I had to do.

wm030303 :

You just need to compute your mileage and get receipts from the pharmacy.

wm030303 :

Any non taxable income should not be re[portted on the 1099

Customer:

So if they send me a 1099 with the amount they compensated me for, is that considered inaccurately filed?

Customer:

I just don't understand how surgery compensation is treated like self-employment income. I apologize for the confusion.

wm030303 :

It is not considered taxable income

Customer:

Ok. I will have to deal with the clinic if I do receive one then. Thank you for your time.

wm030303 :

kindly accept my answer

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