Taxes on egg donation: should payment be taxable income?
I would like to share my opinion to all of you regarding egg donation and surrogacy, because the term “egg donation” has become a bit of a misnomer, at least here in the US. I’ve read some of your articles about egg donation in Spain and I find this fertility treatment is way more fair than here in the US, where it has turned into a “sale/purchase” reproductive alternative.
Originally, egg donation, as the word “donation” itself suggests, was an altruistic thing, above all. I understand donors are given a courtesy amount of money, because she undergoes a wide range of risks, and that should be rewarded in some way. But as I see it now, donors are typically compensated, and compensated very well.
What’s the point? Far from being altruistic, it’s become another business. That’s why I want to know if there exist any taxes on egg donation. I mean, if the payment is taxable income or not. If so, I agree with that even though most donors don’t. This way, only those who really want to “donate” in the true sense of the term will engage into this process. What does the IRS say about that?
ThanksDecember 3, 2015 at 10:32 am
This is a rather controversial question, especially from the taxpayer position, but the answer is yes, compensation for egg donation is considered taxable income by the Internal Revenue Service (IRS).This is because Section 61 of the Internal Revenue Code establishes that gross income includes “all income from whatever sources derived, including compensation for services”.
Although some donors find an exception at Section 104(a)(2), which excludes any damages received “on account of personal injuries or physical sickness”, the truth is that egg donation is not included in this case, since the IRS considers that the amount given for donating your eggs is in exchange for “services provided”.
As a result, egg donor agencies and fertility clinics must report this income to the IRS and then donors are sent a 1099 tax form at the beginning of the year after their egg donation. In this form, you have to report your earnings and, subsequently, pay the appropriate taxes.
I hope I have clarified your concerns,
RegardsDecember 16, 2015 at 10:57 am
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