Question about reporting income from selling plasma on your taxes

[Wesley_Clark]

Last year I made about $1300 selling plasma and I want to report it on my taxes. Do I need any records or can I just estimate $1300 and explain how I got the money, or will doing that put me at risk of an audit?

[Stage_Manager]

You probably will be getting a Form 1099-MISC from the place to which you sold your plasma. If so, it should arrive by January 31. Or, you could call the place and ask if they will be sending out a form.

If not, simply indicate the source of the income and include it. As for triggering an audit, it would likely depend on your other income. If the only income you claim is this, it may or (more likely) may not. If you made 50 or 60 grand, I highly doubt it would trigger an audit.

They generally don’t pursue if you voluntarily include income. It’s when they think you’re hiding income that they get upset.

[racer72]

I sold plasma in my younger days. I was told I was selling a product for cash, not working for pay so the money I received was not taxable. If the buyer of your plasma does not provide any tax document to use in filing your taxes, I would not think you would even have to claim the money.

[mhendo]

@racer72

I sold plasma in my younger days. I was told I was selling a product for cash, not working for pay so the money I received was not taxable. If the buyer of your plasma does not provide any tax document to use in filing your taxes, I would not think you would even have to claim the money.

Just because you’re selling “a product for cash” doesn’t mean that the IRS does not consider the remuneration to be income.

Take this article, for example, which suggests that selling plasma may indeed me taxable income:

“Based on our statistical samples, we estimate that approximately $71 million in self-employment taxes remain unassessed each year for taxpayers earning self-employment income of $2,000 or more,” said the report, referring to strictly legal activities.

“By working these cases in correspondence examination before refunds are issued to taxpayers, the IRS could immediately collect self-employment taxes of $21 million each year. Over 5 years, this totals $105 million.”

In January 2001, the IRS responded and began identifying taxpayers with potential unreported income as the returns are processed. Interestingly, if one was to give plasma in Tucson twice a week for a year, they would take in over $2,400 in cash–over the IRS $2,000 limit.

“You donate your plasma and we’re compensating you for your time spent here,” says Kolar at Aventis Bio-Sciences. “We don’t report it to the IRS and you don’t have to fill out a W2 or anything.”

And the feds are following the money. According to the Treasury Department, $100 bills have risen from less than 20 percent of currency in 1967 to more than 63 percent today. The assumption is that “law-abiding citizens” will not ordinarily increase their day-to-day need for cash so any significant increase “must be used in the underground economy.”

Now, i’m not a tax expert, so i’m not sure if the $2000 limit discussed in this article is the official figure above which you are required to declare your self-employment income, or if this is just the amount that the Feds use as a cut-off point for their investigations. But it seems to be clear from the article that income made from selling plasma is potentially taxable income. This Oregon website tends to support my point.

You might also like to check out pp. 19ff of this document (warning: pdf) for a case which seems to be relevant. The case goes on for a few pages, but here’s a key section:

In addition to his regular job, Bubba was in a paid donor program for blood plasma. Bubba’s blood type was in sufficient demand to make the needles in the arm and the weekly trips to the plasma lab worth the money. He would travel about 20 miles to and from the lab approximately once a week, and incurred about $650 in transportation expenses during the year in question. He was also required to eat a high-protein diet to retain a proper concentration of iron, protein, and antibodies in his blood. When he went to the lab, his blood was tested for the right stuff, and if it was deficient the doctors would not allow him to give plasma that week. Bubba paid about $800 for protein and mineral supplements during the year.

Before Leonard prepared Bubba and Bertha’s return, he considered the nature of Bubba’s blood activity. Leonard determined that Bubba was actively engaged in the continual and regular process of producing and selling blood plasma to the lab for profit, which qualified as a business.

<snip>

Leonard made sure that Bubba had all of the receipts and records necessary to substantiate his deductions. He then prepared Schedule C for Bubba and Bertha’s return, claiming deductions for the protein and mineral supplements and the transportation.

The whole document is essentially a treatise on how helpful it can be to have a tax consultant help you with your taxes. Bubba gets audited by the IRS, which tries to invalidate some of his claims and make him pay more tax, but his trusty tax consultant, Leonard, makes sure that Bubba doesn’t have to fork over any more cash.

[Mr.Slant]

@racer72

I sold plasma in my younger days. I was told I was selling a product for cash, not working for pay so the money I received was not taxable. If the buyer of your plasma does not provide any tax document to use in filing your taxes, I would not think you would even have to claim the money.

This argument falls flat on its face. That logic would mean that factory owners were tax free because they were letting an asset they own make money for them.
Then again… I don’t know when your younger days were, and maybe the IRS had some exemption for plasma donation back in your days.

[Boyo_Jim]

@racer72

I sold plasma in my younger days. I was told I was selling a product for cash, not working for pay so the money I received was not taxable. If the buyer of your plasma does not provide any tax document to use in filing your taxes, I would not think you would even have to claim the money.

So if I’m a farmer and sell my crops, I don’t pay income tax? I don’t think so.

[racer72]

I’ve sold a couple old cars, some tools and other various items last year, made a bit over $2000 doing so. Think I’m going to pay taxes on that? No way. I would consider my plasma that is something I own and if I want to sell some to put some cash in my pocket, I’m not going to pay taxes on it. I doubt the OP’s occupation or vocation is plasma donor. If the money is not reported as income to the IRS, I wouldn’t claim it on my taxes.

[mhendo]

@racer72

I’ve sold a couple old cars, some tools and other various items last year, made a bit over $2000 doing so. Think I’m going to pay taxes on that? No way. I would consider my plasma that is something I own and if I want to sell some to put some cash in my pocket, I’m not going to pay taxes on it. I doubt the OP’s occupation or vocation is plasma donor. If the money is not reported as income to the IRS, I wouldn’t claim it on my taxes.

This may come as a surprise to you, but just because you don’t consider something to be taxable income does not mean that the IRS sees things the same way.

To be quite honest, i’m rather sympathetic to the general idea behind your post, and i’m no tax lawyer so i truly don’t know whether the things you list are considered taxable income. But the evidence suggests that the IRS is not particularly understanding of those who decide unilaterally—especially if they’re wrong—what is and is not taxable income.

[Boyo_Jim]

@racer72

I’ve sold a couple old cars, some tools and other various items last year, made a bit over $2000 doing so. Think I’m going to pay taxes on that? No way. I would consider my plasma that is something I own and if I want to sell some to put some cash in my pocket, I’m not going to pay taxes on it. I doubt the OP’s occupation or vocation is plasma donor. If the money is not reported as income to the IRS, I wouldn’t claim it on my taxes.

IANA lawyer or tax specialist, but I believe what you are suggesting is tantamount to advocating the commission of the crime of tax evasion. All you’re saying is that if the other party doesn’t report it to the IRS, you don’t either, and voila, no tax liability.

The entire wholesale/retail/resale portion of the economy does essentially the same thing as your example. They simply buy products cheaply (how did you acquire the cars you later sold?), making the items their property, and sell them again at a higher price. I can tell you for sure that there is tax liability on the profits, because I know a few people who run small businesses who do just that kind of thing.

[vetbridge]

Back in my youth when I sold plasma (as well as any other body fluid that would get me a few bucks) nobody used their real name/address/etc in order to avoid tax consequences. Is record keeping more strict nowadays?

[Excalibre]

@vetbridge

Back in my youth when I sold plasma (as well as any other body fluid that would get me a few bucks) nobody used their real name/address/etc in order to avoid tax consequences. Is record keeping more strict nowadays?

Which other bodily fluids can be sold for a few bucks? Wait, no, maybe it’s not a good idea to ask this question.

[19ForMe]

Racer 72 - “I’ve sold a couple old cars, some tools and other various items last year, made a bit over $2000 doing so. Think I’m going to pay taxes on that? No way.”

The sales you describe are are taxable. To determine the tax treatment, ask these questions:

1. How much did you pay for them? This includes cash paid, work performed in exchange or anything you traded for them.

2. Are the assets used in a business? Tools used by a tradesman are assets used in a business. Tools used by a homeowner are not.

3. If used in a business, did you deduct depreciation expense related to them.

If you did not use the assets in a business and paid more for them than you sold them for, you owe no tax. If you had a gain and the assets were not business related, you generally owe capital gains tax.

If the assets were used in a business, you have a bit of complexity and should get some help complying with the law.

That said, it is probably common to ignore the law when selling small pieces of personal property for cash.

[vetbridge]

@Excalibre

Which other bodily fluids can be sold for a few bucks? Wait, no, maybe it’s not a good idea to ask this question.

Why, semen, of course.

[Gfactor]

The IRS considers donor compensation taxable income, if it amounts to more than $600 per year.

http://www.wweek.com/story.php?story=4049

[Gfactor]

Here’s another bit along the same lines.

The Internal Revenue Service (IRS) states that compensation received in exchange for oocyte donation must be declared as income (The NABER Report, 1996). Participants were asked whether they thought that they would have to pay taxes on the compensation. Approximately half did pay taxes, but they were not always informed about this ahead of time. A number of women were shocked when a W-2 (tax) form arrived in the post, or their accountant informed them about this rule. Many of these women were frustrated not only because they thought the tax was unfair, but also because they did not know ahead of time, so they could set money aside. Women who did not pay taxes were under the impression that either it was not enough money to declare; it was reimbursement for pain and suffering and was therefore not taxable; or that it was a gift and was therefore exempt.

http://humrep.oupjournals.org/cgi/content/full/15/4/798#THE-NABER-REPORT-1996

[Excalibre]

@vetbridge

Why, semen, of course.

Hey, I have that!

Actually, now I’m curious. Can you tell some about that whole process? I’d be interested to know how lucrative it is, etc. Do you have to be particularly “worthy” to sell it? I’m quite certain I wouldn’t qualify, but I’m curious nonetheless.

[CynicalGabe]

Places pay money for plasma? Shit, I give those mofos at the bloodbank a few units a week for free.

[NotNow]

@CynicalGabe

Places pay money for plasma? Shit, I give those mofos at the bloodbank a few units a week for free.

I was thinking the same thing. How exactly can I make $1,300 selling my lifeblood?
[/hijack]