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Egg Donation & Taxes: What Egg Donors Need to Know in 2024

Egg donation is a generous act that can help families achieve their dreams of parenthood. However, if you’re considering becoming an egg donor, it’s important to understand the financial implications—especially when it comes to taxes.

Whether you’re new to the process or already familiar, this guide will walk you through what you need to know about the taxation of egg donor compensation in 2024.

❓ Can you deduct egg donor fees on taxes?

Yes, according to the Internal Revenue Code Section 213(a), the cost of donor eggs is deductible as medical expenses. The Code states, “Section 213(a) allows a deduction for uncompensated expenses for medical care of an individual, his spouse or a dependent to the extent the expenses exceed 7.5 percent of adjusted gross income.”

❓ How much can an egg donor deduct from taxes?

According to the Pacific Fertility Center, “The fee paid to egg donors for completing a donor cycle is $10,000. If you have any questions regarding the fee paid to egg donors, please do not hesitate to contact us. There are many reasons for a woman to choose to become an egg donor. For many egg donors, the fee paid is not the main reason for egg donation. Rather, the satisfaction of participating in the miracle of life is the greatest compensation paid to egg donors.”

❓ Is the compensation received taxable?

Yes. Compensation for egg donation is considered taxable income by the Internal Revenue Service and the egg donor agency is obligated to report this income to the IRS. You will receive a Form 1099 at the beginning of the year after your egg donation so you can report your earnings and pay the appropriate taxes.

Depending on your tax bracket, that is how much you will get taxed on your income from this donation. For example, if you got paid $10,000 and were taxed at the self-employment rate of 30.3%, you only make $6,970.00.

Planning on egg donation in 2024?

Whether you’re a first-time egg donor or a seasoned pro, navigating the tax implications can be tricky. Understanding how much you’ll owe and when can make a significant difference in your financial planning. If you have questions about your specific situation, don’t hesitate to reach out to us—we’re here to help.

Give us a call today—we’ll help you make sure that your generosity doesn’t come with any unwelcome surprises at tax time.

What if I can’t pay my taxes?

It’s a common problem: You want to file your taxes on time, but you already know you’ll owe more than you can afford right now. So, you’re tempted to delay filing, thinking the IRS won’t come knocking until they have that latest tax return in hand.

Spoiler alert: You should still file your taxes, even if your wallet’s feeling a little light.

Am I Required to File a Tax Return?

📌 The Gross Income Filing Requirement
You may want to file a tax return, but you are not actually required to. Generally, the gross income filing requirement is based on the standard deduction plus personal exemption for your filing status. The IRS has a tool to determine if you are required to file a tax return based on your income alone. Notably, taxpayers who are married and filing separately have a gross income filing requirement.

Other situations in which you must file a tax return Regardless of the total reported income on your tax return, there are other situations in which you must file a tax return.

📌 Self-employment
If you owe self-employment tax on net self-employment income of \$400 or more, you are obligated to file a tax return. It’s easy to go past this amount if you drive for Lyft or Uber, are giving freelance work a try, or have any other form of self-employment income that nets out to $400 or more after your deductible expenses.

📌 Affordable Care Act
You also must file a tax return if you receive Affordable Care Act subsidies for your health insurance and if you have any recapture payments such as the First-Time Homebuyer Credit. Any early distributions taken against an IRA or 401(k) also require you to file a tax return even if you had no other income, and the same is true if you reach age 70 1/2 during the tax year and were required to make the required minimum distributions (RMDs) from your retirement plan, but did not actually start these payments yet.

📌 To get a tax refund
Even if you are not mandated to file a tax return, you may still want to file one to get a tax refund. If you aren’t due a tax refund, it’s still a good idea to have a tax return on file with the IRS. Tax returns are commonly requested when applying for a lease or mortgage, or to show proof of income and demonstrate the ability (or inability) to pay for higher education and other important aspects of life that may arise.

📌 Filing a Tax Return vs. Paying Your Actual Tax Bill
A common misconception is that you need to pay all taxes due when you file your tax return. While it’s prudent to do so, you are not actually required to. Filing your actual tax return is still the very first thing you should do no matter how much you owe, even if you’re filing it late. Doing so will prevent steep penalties from being incurred if you were required to file a tax return. Additionally, suppose you put off filing your tax return for too long. In that case, the IRS can file a substitute return that won’t apply for any tax benefits and will make their assessment against you larger than it actually should be.

📌 Even if you can’t afford to pay you should still file
Even if you can’t afford to put anything toward your tax bill right now, the very least you should do is file your tax return before the deadline every year. If you want to file your taxes despite being unable to pay your bill right now, you can still do so.

📌 Receiving an Automated Tax Bill From the IRS
If you cannot pay your taxes, you should still file a tax return without including payment. You can also include a partial payment of any size, even if it’s a small amount like $20. The IRS will not issue a judgment that quickly after you file your return, and even a small payment can help you save some money on interest.

The IRS will send an automated bill by mail if you do not pay your entire tax bill upon filing your return. You can pay your balance before the bill arrives if you have the money to do so, but getting the bill in the mail doesn’t mean you are facing a lien against your bank account.

Interest will accrue on the unpaid balance as long as it goes unpaid, but owing money is a separate concept from filing your tax return on time, so you can and should file even if you can’t pay.

Need Help?

If your tax bill is giving you sleepless nights, let’s work together to find a solution. Whether it’s setting up an IRS payment plan or exploring IRS installment options, we’re here to help you navigate 2024 with confidence. Reach out today—peace of mind is just a conversation away.

Social Security Is Taxable? How to Minimize Taxes in 2024

How much (if any) of your Social Security benefits are taxable depends on several key factors. The following information will help you understand the taxability of your Social Security benefits.

Taxable Social Security Benefits

For this discussion, the term “Social Security benefits” refers to the gross amount of benefits you receive (i.e., the amount before any reductions due to payments withheld for Medicare premiums). For tax purposes, Social Security benefits are treated the same regardless of whether the benefits are paid due to disability, retirement, or reaching the eligibility age. Supplemental Security Income benefits are not included in these computations because they are not taxable under any circumstance.

The taxability of your Social Security benefits depends on your total income and marital status:

📌 If Social Security is your only source of income, it is generally not taxable.
📌 On the other hand, if you have other significant income, up to 85% of your Social Security benefits may be taxable.
📌 If you are married and filing separately, and you lived with your spouse at any time during the year, 85% of your Social Security benefits are taxable—regardless of your income. This rule prevents married taxpayers who live together from filing separately to reduce the income on each return and thus reduce the amount of Social Security income that is subject to tax.

💡 The Formula

The following quick computation can determine if some of your benefits are taxable: Add half of your total Social Security benefits to your total other income, including any tax-exempt interest and certain other exclusions from income. Then, compare this total to the base amount used for your filing status. If the total exceeds the base amount, some of your benefits may be taxable.

💵 Income Exclusions

These exclusions include interest from qualified U.S. savings bonds (used for education expenses), employer-provided adoption benefits, foreign-earned income or foreign housing income, and income earned by bona fide residents of American Samoa or Puerto Rico.

When taxpayers can defer their non-Social Security income from one year to another, such as by delaying individual retirement account (IRA) distributions, they may be able to plan their income to eliminate or minimize the tax on their Social Security benefits in a given year. However, the required minimum distribution (RMD) rules for IRAs and other retirement plans must be taken into account.

Individuals with substantial IRAs who either aren’t required to make withdrawals or are making post-age 70.5 RMDs but are not withdrawing enough to reach the Social Security tax threshold may be missing an opportunity for tax-free withdrawals. Everyone’s circumstances are different, and what works for one person may not work for another.

Need Help?

Want to ensure you’re not overpaying on your Social Security benefits in 2024? Reach out today for a personalized tax strategy session tailored to your unique situation. Let’s make sure you’re getting the most out of your hard-earned benefits.

Mid-Year Tax Checkup : Would it benefit you?

A mid-year tax check-up isn’t just for procrastinators—it’s for anyone who wants to make sure they’re not leaving money on the table. If you’re already starting to worry about taxes, don’t wait until the last minute. Taking action now could help you uncover opportunities to lower your tax bill and avoid penalties.

💡 Events That Could Impact Your Taxes

The following are some events that can affect your tax return; you may need to take steps to mitigate their impact and avoid unpleasant surprises after it is too late to address them.

Your Family Status Could Impact Your Taxes

❓Did you get married, get divorced, or become widowed?
❓Are you paying college tuition for yourself, your spouse, or your dependent(s)?
❓Did you welcome a new child into your family? Time to consider a tax-advantaged educational savings plan!

Change in Your Work Status Could Impact Your Taxes

❓ Did you change jobs or has your spouse started working?
❓Did you retire this year?
❓If you are an employee that incurs job-related expenses that aren’t deductible for years 2018 through 2025, have you arranged with your employer to participate in an accountable reimbursement plan for these expenses?

Changes In Income and Investments Could Impact Your Taxes

❓Did you have a substantial increase or decrease in income?
❓Did you have a substantial gain from the sale of stocks or bonds?
❓Are you considering an investment in a Qualified Opportunity Fund to defer tax on capital gains?
❓Are you taking full advantage of retirement savings plans?
❓Were you the beneficiary of an inheritance this year?
❓Are you on track to withdraw the required amount from your IRA (age 70-1/2 or older)?
❓Are you taking advantage of the IRA-to-charity transfers (age 70-1/2 or older)?
❓Do you have substantial investment income or gains from the sale of investment assets? If so, you may be hit with the 3.8% surtax on net investment income and need to adjust your advance tax payments.
❓Did you make any unplanned withdrawals from an IRA or pension plan?
❓Did you purchase your health insurance through a government insurance marketplace and qualify for an insurance premium subsidy? If your income subsequently increases, you may need to be prepared to repay some portion of the subsidy.

Real Estate Could Impact Your Taxes

❓Did you buy or sell a rental?
❓Did you start, acquire, or sell a business?
❓Did you buy or sell a home?
❓Did you refinance your home or take out a second home mortgage this year?
❓Did you, or are you planning to, make energy-efficiency improvements to your main home or install a solar system for your main or second home this year?

Changes in Your Business Could Impact Your Taxes

❓Have you made any significant equipment purchases for your business?
❓Are you planning to purchase a new business vehicle and dispose of the old one?
❓Are your cash and non-cash charitable contributions adequately documented?
❓If your expenses eligible for itemizing are less than the standard deduction, have you considered bunching charitable contributions so you can itemize this year and then use the standard deduction next year?
❓If you are a business owner, do you need to change how the business is organized to take full advantage of the 20% of qualified business income deduction?

Are You Keeping Up with Tax Compliance?

❓Are you keeping up with your estimated tax payments or do they need adjusting?
❓Have you stayed abreast of every new tax law change?

Don't Wait Until It's Too Late

If you anticipate or have already encountered any of the above events or conditions, it may be appropriate to schedule a mid-year tax check-up and consult with us—preferably before any of the events listed, and definitely before the end of the year.

Get ahead of the game—schedule your personalized mid-year tax check-up today and stay on top of your 2024 tax strategy!

Understanding your Form 1099-K: How IRS 1099 Rules Impact Your 2024 Taxes

In recent years, the IRS has fine-tuned the rules surrounding Form 1099, and 2024 is no exception. If you’re handling non-employee compensation, you’ll need to stay updated. The IRS continues to use Form 1099-NEC for reporting non-employee compensation, a change first made in 2020. Meanwhile, Form 1099-MISC has also seen its share of updates that you shouldn’t ignore.

What’s New for 2024?

The IRS has made some important tweaks to Form 1099-MISC for the 2024 tax year. One key change is that Box 13 is now dedicated to the Foreign Account Tax Compliance Act (FATCA) filing requirement. As a result, what were originally Boxes 13-17 have been renumbered to Boxes 14-18.

Here’s a quick rundown:

✅ Box 13: Use this to indicate FATCA filing requirements.
✅ Box 14: Report excess golden parachute payments.
✅ Box 15: Include payments under NQDC plans.
✅ Box 16: Report state-withheld taxes.
✅ Box 17: Include the payer’s state number.
✅ Box 18: Report state income.

❓ What’s the Deadline?

To avoid penalties, ensure you’re meeting the 1099 deadlines. Payers must issue Form 1099-MISC to recipients by January 31st. If you’re filing by paper, the IRS deadline is February 28th, while e-filing gives you until March 31st.

❓ Why e-File?

The IRS loves e-filing—and for good reason. It’s faster, more accurate, and lets you keep track of everything without dealing with a mountain of paperwork.

Don't let the IRS catch you off guard!

Navigating these IRS 1099 rules can be tricky, but you don’t have to do it alone. Let us help you with your tax preparation this year. Ready to make sure everything’s in order? Give us a call, and let’s tackle those 1099s together.

How to Pay Taxes: A guide to making payments to the IRS for your Federal Tax

If you aren’t one of those lucky Americans who get a tax refund from the IRS, you might be wondering how to go about paying your balance due.

Here are some electronic and manual payment options that you can use to pay your federal income tax:

📌 Electronic Funds Withdrawal – You can pay using funds from your bank account when your tax return is e-filed. There is no charge by the IRS for using this payment method, and payment can be arranged by your tax return preparer, allowing for the e-filing of your return and submitting an electronic funds withdrawal request at the same time.

📌 Direct Pay – You can schedule and make a payment directly from your checking or savings account using IRS Direct Pay. There is no fee for this service, and you will receive an email notification when the funds have been withdrawn. Payments, including estimated tax payments, can be scheduled up to 30 days in advance. You can change or cancel the payment up to two business days before the scheduled payment date.

📌 Electronic Federal Tax Payment System – This is a more sophisticated version of the IRS’s Direct Pay that allows not only federal income tax but also employment, estimated, and excise tax payments to be made over the internet or by phone from your bank account. The system includes a robust authentication process to ensure the security of the site and your private information. This is a free service. Payments, which can be scheduled up to 365 days in advance, can be changed or canceled up to two days before the scheduled payment date. You can use IRS Form 9783 to enroll in the system or enroll at EFTPS.gov – but do so well in advance of the date when a payment is due, as the government will use U.S. mail to send you a personal identification number (PIN), which you will need to access your EFTPS account.

📌 Send a Check – You can also pay the old-fashioned way by sending in a check along with a payment voucher. The payment voucher – IRS Form 1040-V – includes the information needed to associate your payment with your IRS account. IRS addresses for where to send the payment and your check are included with Form 1040-V.

📌 Pay with Cash – Taxpayers without bank accounts or those who prefer to pay in cash can do so at participating 7-Eleven stores. Taxpayers can do this at more than 7,000 locations nationwide. Visit IRS.gov/paywithcash for instructions on how to pay with cash. There is a small charge for making a cash payment, and the maximum amount is $1,000 per payment. Don’t wait until the last minute, as it can take up to a week for the IRS to receive the cash payment.

Other options to consider:

The IRS also has a mobile app that allows taxpayers to pay with their mobile devices. The IRS2Go app can be used to pay with either Direct Pay or by debit or credit card. IRS2Go is the official mobile app of the IRS and is available for download from Google Play, the Apple App Store, or the Amazon App Store.

If you are unable to pay the taxes that you owe, it’s generally in your best interest to make other arrangements to obtain the funds needed to fully pay your taxes, so you aren’t subjected to the government’s penalties and interest. Here are a few options to consider when you don’t have the funds to pay all of your tax liability:

📌 Credit Card – Another option is to pay by credit card using one of the service providers that work with the IRS. However, since the IRS doesn’t cover the credit card discount fee, you’ll have to pay that fee. You’ll also be responsible for the credit card interest on the payment.

📌 Installment Agreement – If you owe the IRS, you may qualify for a streamlined installment agreement that allows you to make monthly payments for up to six years. You’ll still be subject to the late payment penalty, but it will be reduced by half. Interest will also be charged at the current rate, and you’ll have to pay a user fee to set up the payment plan. By signing up for this arrangement, you agree to keep all future years’ tax obligations current. If you miss payments or have an outstanding past-due amount in a future year, you’ll be in default of the agreement, and the IRS can take enforcement actions to collect the entire amount you owe. To seek an installment agreement, the IRS will need to validate your financial condition and your need for an installment agreement through the information you provide in the Collection Information Statement (in which you list your financial information). You may also pay down your balance to take advantage of the streamlined option.

📌 Tap a Retirement Account – This is possibly the worst option for obtaining funds to pay your taxes because it jeopardizes your retirement, and the distributions are generally taxable at the highest bracket, adding more taxes to the existing problem. Additionally, if you’re under age 59.5, such a withdrawal is also subject to a 10% early-withdrawal penalty, which compounds the problem even further.

📌 Family Loan – Although it may be uncomfortable to ask, obtaining a loan from a relative or friend is an option because this type of loan is generally the least costly in terms of interest.

💡Your Decision to Make

Whatever you decide, don’t ignore your tax liability, as that is the worst thing you can do, and it can only make matters worse.

Need a hand navigating your federal tax payment options this year?

Don’t stress—reach out to us today, and let’s get your IRS account squared away with ease. Make 2024 the year you stay ahead of the game!