Originally Posted by 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.
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.