Becoming an egg donor can be an incredibly rewarding experience. Not only can you experience emotional fulfillment knowing that you’ve helped someone start a family, but it can be financially rewarding as well.
In fact, here at KindEos, we compensate our donors incredibly well. We will give you $8,000 the first time you donate and will increase your compensation by $500 for every subsequent time you donate.
However, it’s essential that you understand the tax implications of becoming an egg donor before you sign up.
Egg donation taxes
You may have heard that you are exempt from paying taxes on any compensation you’ve earned for a service that caused “pain and suffering.” This is generally the case; however, this exemption does not apply to any money you earn from egg donation. The IRS considers any compensation you earn from egg donation to be taxable income.
This decision has even been challenged in court in the case of Perez v. Commissioner. In this case, the court determined that any “pain and suffering” that was experienced must be the result of damage caused during the process. Egg donation rarely causes severe pain and suffering (generally it’s limited to bloating and some slight discomfort).
Additionally, no damage is done during the process, therefore it’s not exempt from tax.
Do You Pay Taxes On Egg Donation Money?
In the eyes of the IRS, egg donation is considered to be compensation for services rendered. Basically, it’s income that you’ve earned for work that you’ve done. There’s also no threshold (meaning, there’s no amount that is exempt), which means that you will be responsible for paying taxes on any money you receive from donating your eggs.
Most egg donor programs will provide you with a 1099 tax form. However, even if you don’t receive a 1099 form from the program you decide to work with, it’s still your legal responsibility to report any income you’ve earned from egg donation.
The amount of tax you are liable for depends on a variety of factors. This includes how much compensation you received (it varies from program to program), how many times you donated, and how much additional income you earned.
Remember, your donation compensation will be added to any other personal income you earn for that financial year. As such, the amount you are taxed will be based on your income tax bracket.
For example, if you’re single and you earned $30,000 from your regular job, plus you earned $8,000 for donating eggs a single time, then you’ll remain in your usual tax bracket and you’ll be taxed at 12%.
However, if your regular income is $40,000 – putting you right at the top of your usual tax bracket – then that $8,000 compensation could push you up into the next bracket, and you’ll be taxed at 22%.
As such, it’s crucial that you understand the tax implications of any egg donations you decide to make.
Know all the facts before considering egg donation
There are a lot of things to consider when deciding whether or not you want to donate eggs. One important factor that may be overlooked is how much you’ll have to pay in tax on the compensation you earn.
As such, it’s important to understand the tax implications of any compensation you earn from donating eggs (such as whether it will push you into a higher tax bracket).
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