How Donating Plasma Could Get You In Trouble With The IRS

While you've heard about squeezing blood from a stone, what about taxes from a plasma donation? Donating plasma requires drawing and separating whole blood into liquid (or plasma) and red blood cells, then returning cells and platelets to the donor along with saline. It's not an entirely comfortable process, but getting paid for plasma donations can mean a lot to students and others struggling with low incomes. From pricked fingers to iron-level maintenance to long waits, anyone who has donated plasma at one of the nation's 1,000-and-counting donation centers knows the process can feel a bit like work. But can the gains from the donations made be taxed like other income? The answer may boil your blood.

Yes, earnings from a plasma donation are fully taxable and must be reported to the IRS. And no, not everyone who donates plasma will need to report their earnings to the revenue service, or pay taxes on them. Some plasma donors will receive a 1099 for the income they earned at their donation centers, while others will not, but will still be obligated to pay taxes on their plasma donor income. We'll explain.

Plasma, when extracted from blood, looks like a yellowish liquid. This is the main component of blood, making up about 55% of what's pumping through your veins (and arteries.) As part of blood, plasma acts as a delivery system for nutrients, proteins, and hormones. Plasma also helps trade out oxygen and carbon dioxide as needed, clears waste, and helps you bounce back from injury and infection. All to say: Plasma is the good stuff, and just as sought for outside the body as within.

Plasma donations are used for a variety of applications, but when they're donated through a paying center, these donations are used in the creation of plasma-derived medications. Plasma is big pharmaceutical business, and it's those pharmaceutical companies who pay for plasma donations. The global plasma market is growing, and expected to reach a value of over $45 billion in 2027, per Research and Markets 2023 analysis. Two-thirds of the global plasma supply comes from the U.S., where restrictions are lower than elsewhere in the world.

Companies incentivize plasma donation by paying anywhere between $30 to $200 per donation (it depends on the promotion they're running). Donors can safely donate twice in a seven-day period if they hit and maintain certain criteria, and as The Economist notes, this works out to 104 times a year. New donors can see even higher incentives upon enrolling at their nearby plasma center. Sometimes donors make a twice-weekly donation for extra holiday cash, while others treat donating like it's a (very modest) income stream.

Millionaires might be able to avoid paying taxes without breaking the law, but don't think the same goes for paid plasma donors. While you might be able to get clever with the many effective ways you can legally avoid paying taxes, if you earn more than $600 from plasma donation in the tax year, you'll pay in blood — and taxes.

Some plasma centers will send high-frequency donors a 1099-MISC form for their earnings. But, even if you don't receive one of these forms from your usual center, if you cross that $600 earnings threshold, still be sure to report your income on your tax return. Save your plasma-center receipts and communication to help with recordkeeping. When filing your taxes, income from plasma donation pay goes on the 1040 line for "other income."

Whether or not you will be obligated to pay taxes on this taxable income, however, is up to a few factors. One, if you're working a job that issues you a W-2, and the plasma donation pay amounts to supplemental income, your tax withholding for your W-2 work may take care of taxes owed on this 1099-MISC income (if you adjust the withholding on your W-4, that is). While donating plasma can be truly life-changing, remember that when you're doing so at a paying center, you're actually selling your plasma, and you will be taxed accordingly. Neglecting to file appropriately come tax time can cause headaches for plasma "donors," especially considering that many are only donating their plasma because they're strapped for cash in the first place.