82-29: Tax Implications of Donating Plasma
IRS guidance provides a specific tax framework for plasma donors, treating compensation as business income and allowing for the recovery of related costs.
Individuals compensated for donating plasma often have questions about the tax implications of these payments. The Internal Revenue Service (IRS) has provided guidance clarifying how this income and related costs are treated. This guidance establishes that the money is taxable and that certain expenses can be used to offset that income, which impacts how a donor reports their earnings.
Tax Treatment of Compensation
Compensation received for the frequent donation of plasma is considered taxable income by the IRS. This is based on the view that the donor is engaged in a trade or business. Revenue Ruling 82-29 clarifies that payments for plasma are compensation for a service, not a gift, and constitute a business activity.
The classification as a trade or business distinguishes the activity from a hobby or a charitable act. When a person donates plasma regularly for payment, the IRS considers them to be operating a small business. This means the income is subject to both regular income tax and self-employment taxes.
This treatment contrasts with the tax handling of charitable donations. While one can deduct the value of property given to a qualified charity, one cannot deduct the value of services rendered. Compensated plasma donation is a business transaction, so it falls into the category of taxable earnings.
Deductible Donation-Related Costs
Because plasma donation income is classified as business income, the donor can deduct expenses that are both “ordinary and necessary.” An ordinary expense is common in that type of business, while a necessary expense is helpful and appropriate. These deductions reduce the amount of income subject to taxation.
The most common deduction is for vehicle expenses traveling to and from the donation center. Donors can deduct the actual costs of using their vehicle or use the standard mileage rate set by the IRS, which is 70 cents per mile for 2025. To claim this, a donor must keep a log of the dates, mileage, and purpose of each trip.
Other potential deductions include parking fees and tolls paid during trips to the plasma center. Donors may also deduct the cost of special dietary items recommended by the center for recovery. For any expense to be deductible, the donor must maintain records, including receipts and logs, to substantiate the claims.
Tax Reporting Requirements
Reporting plasma donation income follows self-employment procedures. If a donor receives $600 or more from a single plasma center during the year, the center must send them a Form 1099-NEC, Nonemployee Compensation. Even if a donor does not receive a 1099-NEC, they are legally obligated to report all income.
This income is reported on Schedule C (Form 1040), Profit or Loss from Business. The total compensation is entered as gross receipts, and deductible expenses are listed in the appropriate categories on the form.
The net profit is calculated by subtracting total expenses from gross income on Schedule C. This net profit figure is then carried over to Schedule 1 of Form 1040 and added to other income. It is also used to calculate self-employment tax on Schedule SE (Form 1040), Self-Employment Tax.