Are we wrongly telling our participants that they don't get taxed?

May 24, 2012 11:50 AM

I'm trying to find information about taxes and volunteer paid experimental (non-clinical) studies. I work in a lab, and one of our participants told us a week ago that if a study pays (the volunteer) over a certain amount, it gets taxed. Can anyone tell me if this is true and give me an official link? We're in Philadelphia, PA, USA. I can provide any other relevant information you need. Thanks!
posted by two lights above the sea to Work & Money (6 answers total)

Best answer: I believe the cut off is $600/year. They're not taxed on the first $600, but anything over that is taxed as income. We have all of our volunteers fill out a W-9 (I'm also in Philly). There's some info on this NIH page.
posted by Katine at 12:00 PM on May 24, 2012 [1 favorite]

You have to issue a 1099 for anyone who makes $600 or over.
posted by The Light Fantastic at 12:02 PM on May 24, 2012

Response by poster: We also have our participants fill out W-9s. Our business office is hopeless...
posted by two lights above the sea at 12:04 PM on May 24, 2012

So, my understanding, backed up by some links below, is that 100% of it is taxable, theoretically, however at $600 or more per year you have to provide them with a 1099 and report it. So while it's technically income that they should, in 100% honesty land, report even if it's $20, it doesn't really count until it's $600. Institutions with info about it have docs up here, and here that say similar things. I believe that $600 is institution-wide, so if they are participating in several experiments at your institution you may need to have the institution do the 1099s even if they're not hitting $600 in your study.
posted by brainmouse at 12:05 PM on May 24, 2012 [1 favorite]

Best answer: You're looking for IRS Instructions for Form 1099-MISC, which on page 4 describes "A payment or series of payments to individuals for participating in a medical health study or studies" as "Other Income," of which amounts over $600 must be reported in Box 3 of the form.
posted by valkyryn at 12:07 PM on May 24, 2012

Response by poster: Ok, thanks everyone!
posted by two lights above the sea at 12:11 PM on May 24, 2012