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The bad news it is taxable income. The good news is that it is not considered "self-employment" (for providing a service) so you don't owe self-employment tax. You should expect to receive a 1099-MISC with the income in box 3. Enter the 1099-MISC and answer the questions in the direction away from the idea of performing work -- this is not similar to your usual job, you did not intend to earn money, you do not plan to do it again. There may also be a box to check on a page of Special Circumstances for "this was payment for a medical study."
The income will end up as 'other income' on line 21 of form 1040. It gets added to your other income and taxed at your regular rate (15% or 25% for most people).
My Fiance is currently going through the process of donating eggs. We live in Indiana. How would we need to apply it to our taxes? would it be the same way?
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