The legalities regarding whether or not egg donation fees are taxable income have historically been a bit muddy. The standard was that since the donor was not being compensated for the genetic material itself, but rather the pain and suffering necessary to retrieve the eggs, any financial gain should be non-taxable.
Recent Rulings
That changed with the recent United States Tax Court ruling in Perez v. Commissioner, No. 9103-12. The court found that the pain and suffering experienced by the petitioner was not outside the scope of what was expected, particularly at the time of her second donation. The compensation, according to the court, was in exchange for services rendered and as such, was taxable income.
What Does This Mean For Egg Donors?
Despite how you may have treated fees from previous donations or what you may hear from other donors, you must declare any compensation you receive for donating eggs as part of your taxable income.
The agency or facility that you used to go through the egg retrieval process should issue you a 1099 miscellaneous form by January 31 of the year following that of your donation. 1099s are issued for any amount exceeding $600 in a calendar year. Learn more about 1099 income here.
How Do I Report Egg Donor Compensation With My 1099?
If you have no other freelance or contractor income, you may be able to add the compensation directly to your 1040. A better choice may be to add an IRS Schedule C to your return which may allow you to deduct any nonreimbursed expenses you may have incurred throughout the process, such as travel, etc.
Consult A Tax Professional For Details.
This advice should serve only as a guideline. Your tax professional can ensure you are compliant with current tax law for your area and that you don’t miss any legal deductions.
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