Egg donor compensation is taxable income, and below we’ve answered the most common questions you may have.
When will I be paid my compensation?
You will receive $750 of your total egg donor compensation when you begin injections, with the balance of your compensation disbursed to you at egg retrieval, no matter the outcome of the cycle or the number of eggs retrieved.
Will I be taxed on my compensation?
The monies you receive from donating your eggs, in the form of compensation, is taxable income. Creating New Generations will report compensation paid to the Internal Revenue Service (IRS) via a 1099-MISC form, sent to you in January of the year following your donation. You are responsible for any federal, state, or local taxes on the income earned.
What is a 1099-MISC form?
A 1099-MISC form is an IRS tax form used to report the total amount of payments you receive from an entity during the tax year services were provided.
But what about damages from pain and suffering?
According to the legal terminology used in egg donor-intended parent legal agreements, egg donor compensation is categorized as payment for pain and suffering, which, some may argue, amounts to “damages” which could be deemed tax-free. However, a January 2015 court ruling between Perez v. Commissioner ruled that egg donor compensation is for the purchase of services performed within the scope of a binding egg donor-intended parent legal agreement, and because egg donors voluntarily sign such agreements before said pain and suffering takes place, monies received in the form of compensation is taxable income and not for damages.
Disclaimer: The content provided above is not intended for, nor should it be used as, a substitute for professional tax advice. It should not replace a conversation you have directly with your accountant or tax preparer. Prior to beginning an egg donation cycle, we strongly encourage you discuss potential tax implications with your accountant or tax preparer.