Payment for Drug Trial

[Lion EA]

I have a H/W who each received under $800 and NO Form 1099-MISC for participating in a drug trial. The husband has early-onset Alzheimer's; the wife drove and accompanied her husband. Is this taxable income to the H/W each? They do not do this for a living, so no Schedule C, right? They did this in hopes of helping the husband. Other income? This is the first time I had clients in a drug trial.

[Catherine]

Other income, not subject to self-employment tax.  They don't take oddball drugs on a regular basis hoping to make a cash profit!

[BulldogTom]

Put it in with your medical expenses (reduce them) and then put your medical miles in.   Treat it like a refund of insurance premiums.

Tom
Modesto, CA

[Lee B]

3 hours ago, BulldogTom said:

Put it in with your medical expenses (reduce them) and then put your medical miles in.   Treat it like a refund of insurance premiums.

Tom
Modesto, CA

I much prefer Catherine's answer, since netting may not even change their taxable income if they take the standard deduction

and probably trigger an IRS letter due to no match of the 1099s.

[ILLMAS]

There is always an oddball lol:

 

 

[Gail in Virginia]

[Lion EA]

NO 1099s were received, and the amount was greater than $600 to each spouse. So, I was hoping that payments to medical research guinea pigs might be nontaxable. But, the couple told me about it; and I told them it was probably taxable for federal and state income tax, so they're expecting it. I'm continuing to search, but I haven't had a client in a drug trial before, so trying different search terms.

[jklcpa]

at ILLMAS' youtube!

 

[Max W]

35 minutes ago, ILLMAS said:

There is always an oddball lol:

It's SE taxable if he does it a 2nd time. 

[ILLMAS]

24 minutes ago, Max W said:

It's SE taxable if he does it a 2nd time. 

If can always buy some deer balls afterwards, they are under a buck. 

[Gail in Virginia]

Lion, to get back on track.  If the payments were considered reimbursement for travel expenses rather than payment for participation, then they are not taxable.  If the participant in the study has a "rare" disease, then under the Ensuring Access to Clinical Trials act of 2015, they may not be taxable.   I found this article that may help you to find further information:  https://forteresearch.com/news/payments-to-research-subjects-what-is-taxable-income/

[Lion EA]

Well, his early-onset Alzheimer's doesn't show up as a rare disease. However, wife's check was definitely for driving him back and forth to another town for the trial, and no 1099, so I think her money is not taxable. And, husband's check is for the exact same amount as wife's, so maybe also for travel time. At least I know what type of questions to ask wife and, of course, for any documents, contract, whatever paperwork they signed or received for participating in the clinical trial from which they received stipends. She is organized and keeps everything do do with money (she's self-employed and they have a partnership and two kids that work). The odd amount of $748 each suggests mileage reimbursements -- I hope! Thanx, all.

[Medlin Software, Dennis]

One of my kids manages trials at a university.  Interesting field, and not what I would have expected.  Most of the work is with new ways to use existing meds/treatments in a different way.  One of the more fascinating was a blood prick test to rule "in" likely concussions.  The goal was to have the test available even at youth sports level.

He says most of his patients/clients are not repeat participants, as the testing is very specific with criteria.  The payout, when there is any, are constructed to be expense reimbursements only.

[Lion EA]

And, when they are expense reimbursements only, do they NOT issue 1099s?

[Medlin Software, Dennis]

7 minutes ago, Lion EA said:

And, when they are expense reimbursements only, do they NOT issue 1099s?

I don't know the university's inner workings.  If it is accountable reimbursement, it is not taxable, nor does it need to be on a 1099.  If not accountable, or if it is participation compensation, then if over 600 calendar, likely needs a 1099.  The rare disease ruling allows up to 2k (non accountable reimbursement or participation compensation) to not be considered for things like SSI, but does not change tax liability.

I have not researched this recently, but that is my memory based on another child being considered for a long term study.