Paid for Medical Studies

Today TaxMama hears from Charles in Arizona with this situation. “It seems that no one has an answer to my question. Last year, I participated in a medical study and earned approximately. $4,300. Now I am trying to determine how to approach the 1099-MISC the clinic sent me. The income is in the Other income box. I have a choice in TurboTax to select ‘’I performed services for this payer’’ or ‘’I did not perform services for this payer.’’ The first choice charges me for self-employment taxes. The second doesn’t. What do I do?”

Hi Charles,

That is an excellent question. And with the commercials I am hearing on the radio and TV,

this is getting to be quite common.

So…how should you treat the money they paid you?

You did not perform services. They did. You’re right. This should not be subject to self-employment taxes.

So…how do you report this? You have two choices;

1) Other income – not subject to SE tax.

or

2) Reduce your medical expenses. And be sure to enter all your mileage to studies and treatments, and any other out of pocket costs you may have incurred.
http://www.irs.gov/publications/p17/ch21.html#en_US_publink100033919
Also keep an eye on today’s TaxQuip. You may see some of the pros stepping up to comment. http://www.taxquips.com/index.php?id=1228

And remember, you can find answers to all kinds of questions about medical studies and other tax issues, free. Where? Where else? At TaxMama.com

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