Plasm Donations: unearned vs earned income??

[wlandersen]

When and if I enter earnings from donating plasma as misc income, TurboTax enters it as unearned income and it reduces the standard deduction causing my taxes to go up??? Why does it not get entered as earned income? Shouldn't it be earned income??

[DianeW777]

No. Plasma donation is unearned income. It could only be earned income if you are in the business of plasma donation, on a regular and continuous business basis. This is not income earned by you performing a service or sales of a product  you created for resale. The IRS would not consider a plasma donation as an ongoing business concern.

Key elements:

1. A business allows you to deduct the costs necessary to obtain the income.  The law explains that 'you must be engaged in the activity to produce a profit'.  The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.