I served as a surrogate carrier in 2004 and gave
birth earlier this year. The contract was prepared through a surrogacy
agency's lawyer. My question is: Do I have to report my compensation?
If the agency will 1099 me, wouldn't I have received any forms to
file by now?
don't want to communicate with that agency anymore and I wonder what should I
I do feel I shouldn't have to pay taxes for
being compensated for helping a couple to have a baby. What about
all the needles, sticks, stretch marks and pain/suffering I went
through? Is there any way I can go about this dilemma?
Although I didn't feel your pain, I sense it.
Unfortunately, however, it sounds
to me like you have income. Although your generosity allowed a couple
to have a child, I can't see how that would change the fact that
you were compensated for your services. In fact, the payment would
not be considered a gift, as it was not made with gratuitous intent.
You are right in that the agency probably should have
issued you a Form 1099 by now, if the payments were made in 2004,
but maybe you didn't receive it through error. This, however, would
not change your responsibility to report taxable earnings.
The amount you received would be considered
other income, reportable on line 21 of Form 1040, and would not
be subject to self-employment tax since it is not business-related.
The reimbursement of your medical expenses by the contracting couple
would not be considered income to you. However, you cannot exclude
payments from income for pain and suffering and stretch marks, because
these are not expenditures.