How should I report sperm donation compensation on taxes - Schedule C or other income?

But wouldn't regular donations over several months count as "regular and continuous" activity? The clinic is literally paying for his services, right? I'm not a tax expert but that sounds like self-employment to me.

The regularity is just one factor. The courts have generally treated human body products as property, not services. When you donate sperm, you're essentially transferring a biological product, not performing a service. If this were a one-time donation, it would clearly be "other income." The fact that there were multiple donations doesn't automatically make it self-employment. The lack of business expenses, business intent, and the passive nature of the "production" all point toward treating it as other income rather than a business activity.

Does this work if I have both 1099-MISC and 1099-NEC forms? My situation is complicated because I got paid for sperm donation (1099-MISC) but also did some promotional work for the clinic (1099-NEC). Would it handle both situations?

I'm skeptical about tax apps that aren't one of the major players. How is this different from TurboTax or H&R Block? Those already tell you where to put different types of income. What makes this worth using?

It works great with multiple forms. It actually specializes in situations where you have different types of 1099s and need to determine the correct classification. It would recognize that your 1099-MISC sperm donation is "other income" while the promotional work on 1099-NEC is definitely self-employment income requiring Schedule C. The difference from TurboTax is that this isn't just a form-filler but an actual analysis tool. While TurboTax asks you to categorize your income, taxr.ai analyzes your specific situation and tax documents to tell you the correct classification based on tax law and IRS precedents. It's more like having a tax attorney review your specific situation.

Wait, so this service just holds your place in the IRS phone queue? How does that work? Do they have some special access or are they literally just waiting on hold and then calling you?

This sounds like one of those "too good to be true" services. I doubt they can actually get you through faster than calling yourself. The IRS queue is the same for everyone. And I'd be skeptical about giving some random company my tax info.

It's a line-waiting service - they have a system that waits in the IRS phone queue for you instead of you having to stay on hold. When they reach an agent, you get a call to connect with the IRS. There's no special access - they're just saving you from having to listen to the hold music for hours. You don't give them any tax information at all. They just get you connected to the IRS, and then you speak directly with the IRS agent about your tax situation. I was skeptical too, but it saved me from spending another day trying to get through the phone system.

Thanks for the specific references! That's super helpful. Just to clarify, I should write that exact description in the line on Schedule 1? And by doing this, I won't need to pay the 15.3% self-employment tax, right?

Yes, write a brief description like that in the line provided on Schedule 1. Being specific helps if there's ever a question. Correct - by reporting it as Other Income on Schedule 1, you'll only pay regular income tax on the amount, not the additional 15.3% self-employment tax that would apply if you filed Schedule C. The income still increases your tax liability, but without the extra SE tax burden.

This is actually really important advice! I got caught with this last year too. No withholding on 1099 income means you need to plan ahead. The IRS expects you to make quarterly estimated payments if you'll owe more than $1,000 at tax time.

They didn't withhold anything from my payments. Thanks for the warning - I definitely hadn't thought about setting aside money for taxes. Do you know approximately what percentage I should be saving from each payment to cover the taxes?

A rough rule of thumb is to set aside 25-30% of your 1099 income for taxes, but it depends on your total income and tax bracket. If you're in the 22% bracket, you'd pay 22% federal income tax plus any state taxes on that $4,200. Since it's "other income" and not self-employment (as discussed above), you won't owe the additional 15.3% SE tax, which saves you money. You can use Form 1040ES to calculate your estimated payments more precisely based on your expected total income for the year. The IRS also has a withholding calculator on their website that can help you figure out if you need to adjust your regular job's withholding or make quarterly payments.