Taxes for Egg Donors
Yep, it’s true: The money you make from your egg donation is considered taxable income.
Some agencies or clinics will provide you with tax forms, and others won’t. However, in every case, to stay compliant with tax laws and avoid any unsavory surprises down the road (no one wants an audit!), you are required to report your egg donation fee as income and pay applicable taxes on egg donation income.
While I am definitely not a tax professional, and I can’t offer tax advice here. But I can tell you what I’ve learned about taxes and egg donation from multiple donations, asking tons of questions, and unfortunately getting audited myself.
Here’s what I have learned about taxes for egg donors:
Plan ahead. For every donation, I automatically saved and set aside 30% of my fee for taxes. I based this upon multiple personal factors including my state of residence, and my annual income – plus a little extra just in case. The amount you will need to pay will vary based on your own personal situation. You can use a calculator like this one to estimate what your taxes will be so you can be prepared, mentally and financially, for your tax bill.
Know that you will need to advocate for yourself. Over the years, I asked “Is my egg donation fee taxable? Do I owe taxes on my egg donation income?” over and over again. I spoke with multiple tax experts at multiple companies and every single one of them was stumped when it came to how to handle taxes for egg donation income. Some tried to tell me that I needed to report it as business income, some thought I should report it as self-employed income, some straight up told me I was on my own. This is where you will need to become the expert and advocate for yourself. With something as niche and unusual as taxes on egg donation fees, most tax experts will be hearing about it for the first time. Keep asking questions, keep explaining your circumstance, and you will get there!
Patience and clarity goes a long way. When I was audited by the IRS for not correctly paying taxes my egg donation income, it sent me into a paralyzing anxiety spiral. I let the notice sit on my desk for months, and ignored it until it became past due and late fees started wracking up. Eventually, I set aside some quiet time to contact the IRS and get it sorted out. Like most procrastinated tasks, it was easier to take care of than expected! If you find yourself in a situation where you need to amend a return or dispute a notice, you will have to clearly explain your situation, likely multiple times to multiple people. Practice patience, smile while you’re on the phone, use the agent’s name, and take notes on your phone calls. Your notes should include the details of your call like the date and time, the agent’s name and number and any action steps that result from that call.
How to report egg donation income on taxes. I’ll say again: this is not tax advice, simply what I learned from my own experience filing taxes on egg donation income. After some trial and error, getting audited and filing taxes with income from egg donation multiple years, I found that the best way for me to report that income was to report it as “Other income.”
Taxation laws change. When I first started donating eggs, there was a tiny tax loophole that allowed the income from egg donation to be non-taxable. Then, in 2016 or so, that loophole closed and now, egg donation income is taxable just like any other income. It’s unlikely that this will reverse in the future, but it never hurts to stay on top of changes to the tax code and do a bit of research to see if there’s a way you can keep more of your money.
The number one most important thing you can do when it comes to paying taxes on your egg donation is to be prepared and plan ahead. When you’re mentally prepared to set aside a portion of your fee for taxes before you get your check, it’s a lot less painful when tax time comes around.