Are Egg Donor Expenses Tax Deductible?

Egg donation may seem like a selfless, medically intricate, and emotionally significant act, and it is. But it's also a financial transaction. And where there's compensation, there are taxes. So, what happens when tax season rolls around, and you're an egg donor with a check in hand? Can you write off any of those doctor visits, medications, or recovery smoothies? Let’s dissect this delicate but necessary topic.

How Egg Donor Compensation Is Classified

When you receive money for egg donation, it is legally and financially categorized as income. Even if your motivation was altruistic, the IRS doesn’t differentiate between compensation given for love versus compensation given for service. If you’re being paid for providing your eggs, it’s money in exchange for a service rendered.

Many egg donors assume that because the process is medical, the compensation might fall under non-taxable income, like insurance payouts or reimbursements. That would be convenient, wouldn’t it? But no, it’s not classified that way. According to tax professionals and past legal cases, the IRS views this compensation similarly to freelance income. That means you are self-employed in the eyes of the government. 

Donor agencies typically issue a Form 1099-MISC if you’ve earned over $600 in a year. However, even if you don’t get that form, you are still legally obligated to report the income. 

IRS Guidelines on Egg Donation Income

According to the IRS, any income that isn’t specifically exempted by law is taxable. There’s a court case, Perez v. Commissioner, that effectively settled the debate. In that ruling, the court decided that compensation from egg donation is indeed taxable.

The IRS doesn't classify it as a gift (which would be tax-exempt) or a reimbursement. The ruling treated the money as payment for services. So, you can’t argue that you should be exempt because the money was intended to compensate you for pain, time, or inconvenience. 

In fact, some donors have ended up with hefty tax bills because they didn’t report the income, and the IRS caught wind. Late fees, interest,  and audits aren’t fun to deal with. It's far better to.

Can Medical Expenses Be Deducted?

Medical expenses can generally be deducted if you itemize and if those expenses were paid out of pocket. But here’s the catch: egg donors usually don’t pay for their own medical care during the process. The intended parents typically foot the bill. So, unless you paid for something directly (say, a prescription or recovery massage your agency didn’t cover), you can’t claim it.

And even if you did pay for something yourself, the IRS only allows you to deduct the portion of total unreimbursed medical expenses that exceeds 7.5% of your adjusted gross income. That’s a pretty steep threshold. For most donors, that threshold is too high to make the deduction worthwhile.

Now, if you're someone who underwent donation and paid for extra therapy, counseling, or supplemental treatments out-of-pocket (and you itemize), you might qualify to deduct a portion. But again, it’s rare. Most donors walk away from the process without any out-of-pocket costs that would qualify.

Tax Filing Tips for Egg Donors

So what’s a donor to do when tax season rears its paperwork-laden head? Here are some practical tips to keep you on the IRS’s good side:

Keep Records of Everything

Whether it’s emails from the agency, travel receipts, a log of your appointments, or proof of any unreimbursed expenses, save it. You may not need all of it, but if you ever do, you’ll be glad you were meticulous.

Ask For Your 1099-MISC Early

Some agencies don’t send them unless prompted. Don’t wait for the form to arrive like a holiday card. Reach out in January and get ahead.

Consider Quarterly Estimated Tax Payments

If egg donation is one of several gigs you’re juggling, and you’re racking up untaxed income, you might need to pay estimated taxes quarterly to avoid penalties. A tax advisor can help you set this up.

Explore Deductions (With Caution)

While you likely can’t deduct medical costs, there might be opportunities for deductions tied to travel, lodging, or missed work if they weren’t reimbursed. These fall into gray areas, so tread carefully and consult a professional.

File Honestly and Early

This might sound like a no-brainer, but don't downplay your earnings or skip reporting just because no form came in. The IRS can, and often does, match records from multiple sources. Honesty is the best policy, especially when numbers are involved.

FAQs

Can egg donors deduct medical expenses?

Typically, no. Since intended parents usually cover medical costs, donors don’t have qualifying out-of-pocket expenses to deduct. If you somehow did pay a portion yourself, and it meets IRS requirements, it’s worth checking with a tax professional.

Do I have to report egg donor compensation on taxes?

Absolutely. Egg donor compensation is considered taxable income, regardless of whether a 1099 was issued. If you received payment, it’s your responsibility to report it.

Is there any scenario where egg donation income isn’t taxed?

Not unless tax law changes. Currently, all compensation for egg donation is taxable under IRS guidelines.

Can I deduct travel costs or time off work?

Only if those costs weren’t reimbursed and you’re filing as self-employed. Even then, eligibility is narrow and varies case by case. A qualified tax professional is your best guide.

Will I owe a lot in taxes on egg donor income?

It depends on your total income and tax bracket. If egg donation was your only income and below the standard deduction ($13,850 for single filers in 2023), your tax liability might be low. But if it’s supplemental income, be prepared to owe a percentage based on your bracket.

Final Thoughts

Here’s the bottom line: egg donation is as much a financial arrangement as it is a biological and emotional journey. And while you may walk away with a sense of pride, purpose, and a few thousand dollars, you’ll also walk into tax season with a responsibility.

The key is preparation. Know your classification. Track everything. Seek professional help if numbers make your head spin, because while the donation process may end with retrieval, the paperwork continues long after.

Ultimately, being an informed donor isn’t just about knowing what medications you’ll take or how long recovery will last, it’s also about understanding the fiscal side of things.