Here in Cedar City, UT, there are plenty of people who donate plasma for a little extra income and think nothing about how it may impact their taxes. You may have even been told by tax preparer from one of the big box tax return companies that your plasma donation wasn’t considered taxable income. However, that may not be the case.

Rather than trusting a random tax preparer—who likely doesn’t have the education and experience to answer tough tax questions, your local Cedar City accountant is here to help with your plasma donation questions.

Your Plasma Donation May Be Taxable

First, we should address the reasons why many people believe that their plasma donation earnings are tax-exempt.

It’s a donation, and you don’t tax donations. Calling it a plasma donation is something of a misnomer, as you generally aren’t compensated monetarily when you donate. When goods or services are sold, and you earn income, what you call that process doesn’t matter as much—you need to still follow the law.

You can’t pay taxes on a bodily fluid or body part. This reason often floats into a discussion on whether or not plasma donations are taxable income. But let’s look at this a little differently. Say you donated your eggs or were a paid surrogate for someone.

While that was a very kind thing to do, both of these things come with compensation pay thousands of dollars, all of which are counted as taxable income. While plasma donation is on a smaller scale, it falls into the same category of bodily fluid/body part usage for monetary gain is taxable.

I didn’t receive a Form 1099-MISC, so I don’t have to pay taxes. Companies should send independent contractors 1099-MISC to assist with filing their tax returns. While not all plasma centers will send out a 1099-MISC, this lack on their part does not exempt you from paying your taxes. Instead, you will need to list your plasma donation earnings on Line 21 of your Schedule 1 Form 1040, or you can have our accountant help you with your tax preparations.

Also, the issue of paying taxes on plasma donation compensation has gone to trial before in the landmark case United States v. Garber. While the defendant Dorothy Garber was directly contracted and paid by companies for her plasma—due to the rare Rh antibodies in her plasma—the fact that she did not pay taxes and was found guilty of tax evasion can set a precedent.

With the precedent that plasma donation payments are taxable, you don’t want to be found on the wrong side of IRS tax law.

Pitfalls Of The Side Hustle Economy

Generally, most people make plasma donations to earn a little extra money each week to help supplement their main income. Having multiple side hustles is becoming more common, from providing freelance services, driving for rideshare companies, and donating plasma. Problem is, engaging in multiple side gigs can make your taxes far trickier.

When it comes to your plasma donation, you may be able to simply input your earnings on Line 21 and call it good. However, depending on how much you have earned, that may not be enough. As the United States allows for twice a week donations that can range from $30 to $50 a donation, you might rack up quite a bit if you are a regular plasma donator.

For an example of how your earnings can stack up, let’s say that your local plasma donation center pays $30 per donation, and you donate twice a week. So, that’s $60 a week. In one month, you can earn an extra $240. If you donate every week for all 52 weeks of the year, you can earn $3,120 from plasma donation alone.

These numbers are actually a little low for a regular plasma donator, as many plasma centers pay extra when you regularly donate, and sometimes have a special coupon rate for more money. However, that can leave you in a tough spot when it comes to your taxes.

When you make more than $400 from your side hustle, that income is considered self-employment income, and you will need to file a Schedule SE. There are also Medicare and Social Security taxes you will need to pay on self-employment income. So, if you are even a semi-regular plasma donator, you likely need to pay self-employment taxes.

Work With AA Tax & Accounting Services On Your 2019 Tax Return

As you can see, your plasma donations may make your tax return trickier to file properly. Rather than be audited by the IRS and have to pay penalties, you can have peace of mind when working with a trusted accountant who has the experience to help you navigate the complexities of taxes.

To work with our accountant on your 2019 tax return, feel free to contact us and set up your appointment. That way, this year, you can feel completely confident when it comes to your tax return.

The United States federal tax code totals out at 74,608 pages. That’s not a typo. Imagine that — over 74,000 pages of regulations, amendments, loopholes, and legalese.

Not exactly something you’d sit down and read for entertainment.

Of course that number doesn’t include the Utah portion, which presumably adds a lot more. And whether you live in the capitol city or here in beautiful Southern Utah, tax return time can stress anyone out. How is anyone supposed to keep track of it all?

It doesn’t matter if you’re filling as an individual, couple, or business. Navigating the tax code can be a hairy prospect for anyone. Unfortunately, it’s also something you can’t afford to get wrong.

Everyone wants to minimize their tax burden. And nobody wants to face penalties, fines, or even risk legal action for not getting their taxes right. From a relatively un-complex 1040-EZ, to convoluted corporate or LLC filings, you must be aware of all the ins-and-outs of the tax code and how they may apply to you.

Because tax time is no time to fly by the seat of your pants.

Getting your tax return prepared and filed correctly is in your own best interest, not only because you can avoid future troubles, but also because you could lessen your financial liability NOW. And who does’t want that?

Unless you’re an accountant or have training in tax preparation, filing your own tax return can be risky. The IRS employs around 90,000 people, each one paid to do their job by the letter. So you can bet that while they see their fair share of mistakes made by regular folks, they’re going to uphold the rules.

The best way to avoid hot water and pay only the taxes you’re liable for is to get some professional help. CPA and accounting firms in Southern Utah and elsewhere generally employ certified tax preparers. These are the people who know what questions to ask, which forms to use, and how to use every available tool to save you money – while staying on the right side of the law.

What should you look for when hiring a tax preparer?

Obviously, not all of them are created equally, and you shouldn’t trust just anyone with a sign and a costume on a busy street. Here are a few things to consider.

• First and foremost, make sure they have a PTIN. This is a preparer tax identification number. Without it, they are not allowed to prepare tax returns for anyone but themselves. Make sure they have this before giving away any information.
• Other things to consider are their years of experience, whether or not they have documented ability to prepare your type of return, what their fees are, and if they offer e-filing.
• Also, keep in mind that local tax preparers will be the most aware of any tax code nuances and variations in your area.

Filing your tax return is a pretty big deal, but it doesn’t have to cause you undue stress. Here in Southern Utah, there are many qualified tax professionals who can answer your questions and take the burden off your plate. If you aren’t 100% certain you’ll get it right, don’t hesitate to ask for help.

Ask most people about the term bookkeeping, and they’ll bring up things like accounting, invoices, and expenses. While bookkeeping carries different meanings to different people, most accountants would agree that the process of bookkeeping involves what the name implies: keeping the books. Keeping the books usually means tracking and documenting financial transactions of various kinds. It may seem pretty simple, but this is a vital step to a healthy business. And it can quickly get out of hand if you let it.

So, how are bookkeeping and accounting related?

Are bookkeeping and account the same thing? Not really. However, accurate and up-to-date bookkeeping is the foundation of proper accounting. Think of it this way. If a bookkeeper loses track of payables, receivables, or expense transactions, the accountant will never be able to balance the books and provide accurate reporting for taxes, ROI, or any other purpose.

And even in sunny Southern Utah, that’s where some unfortunate things can happen.

To keep your business – and yourself – running in the black both financially and legally, all financial transactions must be tracked, documented, and categorized. The information gleaned from proper bookkeeping is extremely important to keeping your bottom line where it needs to be. Keeping all this information accurate and up to date is the job of your bookkeeper. Whether you’re keeping your own books or using an outside service, there are several things quality bookkeeping can help you stay on top of:

• Income statements
• Balance sheets
• Cash flow analysis and reporting
• Business and financial analytics

Without good bookkeeping, your monthly and year-end accounting data can turn into a big, tangled mess. This is especially important when it comes time to file your tax return. For this reason, a lot of Southern Utah businesses and individuals choose to hire a bookkeeping service.

When you’re running a business, getting some outside help can take a huge weight off of your shoulders. They know the best practices and rules to keep you organized and out of trouble. Best of all, with your bookkeeping safe in the hands of a professional, you can focus on marketing, customer service, and other concerns that make you more successful.

As far as Southern Utah Bookkeeping goes, there are plenty of sources who can answer your questions or just take care of everything for you. If you feel overwhelmed or simply need some clarification, try contacting a local accounting and bookkeeping firm for help. Doing so can save you a lot of hassle and expense in the long run.

When you’re running a business – especially a small one – it’s easy to believe you can handle all the back-office tasks yourself, including the bookkeeping. Starting out, you probably used something like Quickbooks or even spreadsheets to track expenses, payables, and cashflow. But is that really enough?

As you know, tax codes and accounting regulations can be pretty complicated. What you consider a tame kitten can quickly turn into a big, hairy, and hungry monster. Eventually, and hopefully not too late, you realize that you need some outside help. With a Southern Utah bookkeeping and accounting firm on your side, you can rest assured your financials are in good shape. And that will help you avoid future tax and accounting nightmares.

When looking for the right firm, you’ll likely turn to referrals from friends, or browse the web. These are both good ways to find the help you need. However, many experts recommend looking locally first. Why? There are many reasons, but here are just a few to consider.

• Local regulations – As a Southern Utah business, you might run into issues that are unique to the area. Counties often have different tax rates, codes, and incentives not everyone is aware of. When you hire a firm in Southern Utah to handle your bookkeeping, tax returns, and overall financial wellness, you know they are in tune with local regulations.
• Convenience – A healthy business requires staying on top of your financials. When you hire an outside firm, it’s especially important to keep the lines of communication open and maintain a good relationship. All of this becomes easier when you hire a local company. You can stop by the office with questions, make a local call, and easily deliver or retrieve any necessary paperwork without having to scan and email dozens of pages.
• Understanding – Most local bookkeeping and accounting firms are small businesses – just like you. They understand the challenges you face, as well as the benefits of doing business here. They can help you with local networking, business growth, and referrals.

Of course it goes without saying that your Southern Utah accounting and bookkeeping firm can help you with business tasks large and small; from accounts payable and balance sheets, to financial consulting, payroll, and tax returns.

When you’re running a business, it’s easy to spread yourself too thin. Getting some help from a local accountant can keep your financials in check while you focus on growing your business.