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Latest Surrogacy News
Reporting surrogate-parent payments
June 18, 2004
bankrate.com
Dear Tax Talk,
My husband and I are working with a
surrogate mother to carry our child for us. We are
paying compensation and some expenses to her. She has
asked us not to give her a 1099. We consider her an
independent contractor, but we are individuals, not a
business. What should we do?
Kelly
Dear Kelly,
Fortunately, tax compliance is
something you teach and not something in the genes.
Form 1099-Misc
is used by a business to report payments made in any
year to individuals if they total more than $600. It's
similar to an employer giving a Form W-2 to an employee,
except generally no taxes are withheld on a 1099. The
recipient is generally referred to as an independent
contractor.
I don't
believe the term independent contractor has ever been
used to refer to a surrogate mother. In any case,
individuals are not responsible for issuing Form 1099 in
transactions that are not business related. For example,
suppose you were a self-employed physician operating as
a sole proprietorship. The payment to the surrogate
mother falls outside the scope of the business so you
would not be responsible for issuing a 1099 to her.
If you
used an attorney to arrange the surrogacy, and the
attorney paid the fee to the biological mom, then he
might have a responsibility to report the payment. In
that case, the attorney might be her independent
contractor and the child would be the codependent.
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