I've been following this discussion and wanted to share something that might be helpful for those still figuring out their reporting approach. I work as a tax preparer and have handled several plasma donation cases over the past few years. The IRS guidance on this is admittedly murky, but here's how I typically advise clients: if you're donating more than once a month with the primary intent of earning income (rather than just helping others), it's usually safer to report it as self-employment income on Schedule C. The regularity and profit motive are key factors the IRS considers when distinguishing between occasional compensation and business activity. A few practical tips from what I've seen work well: 1. Keep a simple log with donation dates, amounts, and mileage - even just a note in your phone works 2. If you go the Schedule C route, you can deduct mileage, but also consider other reasonable expenses like parking fees or even medical costs if you need to get cleared for donation 3. The plasma center year-end summary that @Felix Grigori mentioned is excellent documentation - I always recommend clients request this For those worried about the self-employment tax, remember that if your total tax liability (including plasma income) will be under $1,000 for the year, you likely don't need to worry about quarterly payments. But definitely keep some money aside for tax time - I typically tell clients to save about 25-30% of their plasma earnings to cover both income and self-employment taxes. The key is consistency and good documentation. The IRS cares more about you reporting the income accurately than they do about the exact method you choose (within reason).

I've been dealing with this exact situation and wanted to share my experience after going through tax season last year. I made about $5,200 from plasma donations and initially tried to report it as "other income" on Schedule 1, but my tax software kept flagging it because of how regular and substantial it was. I ended up switching to Schedule C after doing some research and realizing that I was essentially running a small business - I had set donation days, tracked my earnings, planned around bonus opportunities, and treated it as reliable income. The self-employment tax hit was about $735, but I was able to deduct over $1,800 in mileage (my center is 22 miles away), plus parking fees and even the cost of the required physical exam I needed to get cleared for donation. One thing I learned that might help others: keep receipts for everything related to your donations. I deducted the cost of protein bars and electrolyte drinks I bought specifically for post-donation recovery, since maintaining my health was necessary for me to continue this "business activity." My tax preparer said this was a legitimate business expense since it was directly related to my ability to generate this income. The key insight for me was realizing that the IRS doesn't care what the plasma center calls it - they care about how YOU approach it. If you're doing it systematically to make money, treat it like the small business it actually is.

Don't forget about self-employment taxes! Even though your LLC didn't make money yet, once you do start earning income, you'll need to pay self-employment tax (15.3%) on your profits. Might be worth setting up a good bookkeeping system now before you get busy with actual business. I use QuickBooks Self-Employed and it makes tracking everything super easy.

Great question! I was in almost the exact same situation when I started my consulting LLC. Since you're a single-member LLC, you're absolutely right that it's a disregarded entity for tax purposes. This means you'll report everything on Schedule C of your personal Form 1040, not a separate business return. Even with zero income, I'd recommend filing Schedule C to establish your business activity with the IRS. Report $0 income and list your $4,300 in expenses. For startup costs, you can typically elect to deduct up to $5,000 in your first year under Section 195, with any remainder amortized over 15 years. Since your costs are under $5,000, you should be able to deduct the full amount this year. Just make sure to keep detailed records of everything - receipts, bank statements, etc. The IRS will want to see that this is a legitimate business venture, not a hobby. Also consider getting your EIN confirmation letter and business license documented in your files as proof of when you officially established the LLC. One more tip: even though you haven't made money yet, start tracking mileage for any business-related driving. Those deductions can add up once you're operational!

Is anybody else annoyed that companies do this? They make it sound like they're doing you a favor with relocation and then you get slammed with taxes. My company did the same thing - promised a "fully covered" move and then I ended up owing $5k in taxes. The grossed-up amount never covers the full tax impact!

This is exactly why I always recommend keeping detailed records of any employer-provided relocation benefits throughout the year. The IRS considers most relocation expenses as taxable income, and companies often don't explain this clearly upfront. For your current situation, you'll need to report all income shown on your W-2 - there's no way around that. But here are some steps that might help: 1. Request a detailed breakdown from your employer showing exactly what portion was actual expenses vs. gross-up amount 2. Check if any of the expenses qualify for exclusions (like certain temporary lodging costs) 3. For the underpayment penalty, you may qualify for an exception if your withholding met the safe harbor rules (90% of current year or 100% of prior year tax) 4. Consider filing Form 2210 to request a waiver based on unusual circumstances The key is documenting everything properly. Your employer should have calculated the gross-up to cover the tax impact, but if they used incorrect assumptions about your tax bracket or state taxes, you might have grounds to request additional compensation or a corrected W-2. Don't panic - this is more common than you think, and there are usually ways to minimize the damage if you handle it correctly.

This has been such an educational thread to follow. As someone who works with small business owners in a consulting capacity, I've definitely encountered people who think these LLC schemes are "smart tax planning" rather than fraud. What really stands out to me from all these responses is how the risk profile has completely changed with modern IRS enforcement capabilities. The days of thinking you can fly under the radar with questionable deductions are clearly over. When tax professionals with years of experience are saying they've seen clients face $27,000+ bills after audits, that should be a massive red flag for anyone considering these schemes. The point about documentation being crucial really resonates with me. Even for legitimate businesses, it seems like having detailed records showing the business purpose of every expense isn't just good practice anymore - it's essential protection in today's enforcement environment. To the original poster, I think you're absolutely doing the right thing by questioning this situation. Your professional integrity is worth far more than keeping clients who want to drag you into potentially fraudulent activities. The advice about documenting your guidance in writing and requiring acknowledgments for questionable positions seems like essential protection for anyone in your field. Thank you to all the tax professionals who shared their real experiences here - this kind of insight helps the rest of us understand just how serious these compliance issues have become.

This discussion has been incredibly valuable for understanding the real risks involved in these schemes. As someone who runs a legitimate consulting business, I've always been careful about my deductions, but reading about the IRS's advanced detection capabilities really drives home how important proper documentation is. What concerns me most is how normalized this fake LLC approach has become in some circles. People seem to think that because audit rates are low overall, they're safe - but clearly the technology has changed everything. When the IRS can cross-reference business expenses with credit card transactions and even social media activity, these schemes become incredibly easy to detect. The stories about clients facing $27,000+ bills and multi-year audits are sobering reminders that the "everyone does it" mentality is incredibly dangerous. The short-term tax savings simply aren't worth the potential financial devastation when you get caught. For those of us running legitimate businesses, this reinforces the importance of the "ordinary and necessary" test for every expense. I'd rather be conservative and pay a bit more in taxes than face the nightmare of penalties, interest, and audit costs down the road. To the original poster - you're absolutely right to distance yourself from clients who won't listen to professional guidance on compliance. Your reputation and license are worth far more than any client fees.

This is incredibly helpful - thank you for sharing the direct number and exact steps! I've been stuck in limbo for 5 days with my refund and was starting to panic. The IRS website just says "sent to bank" but my account shows nothing. Just called 877-552-7255 and followed your instructions - the rep confirmed Cross River has my deposit and it should process within 1-2 business days. She mentioned they're definitely seeing delays due to enhanced fraud screening. Really appreciate you taking the time to research this and share what actually works. Bookmarking this post! 🙏

This is such a lifesaver! I've been stuck in this Cross River Bank limbo for 6 days and was going crazy not knowing where my refund was. Just called the number (877-552-7255) and pressed 1 like you said - the rep actually confirmed they have my deposit and said it should release within 2-3 business days max. She explained they're doing extra security checks on IRS deposits which is causing the delays. I was ready to file complaints with everyone but this at least gives me peace of mind that my money isn't lost. Thanks for doing the legwork and sharing the exact steps - you probably saved hundreds of people from having panic attacks! 🙌