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The Life of a Surrogate: An Independent Contractor or Not?

Surrogacy is viewed as something weird. There are vague guidelines and even fewer laws about taxing the income that surrogates make. What do you think? Should they taxed on their income or not?

In the U.S., there’s a deep ambivalence surrounding the issue of gestational surrogacy, a process in which a woman carries and delivers a child for another couple or person.

It’s a hot topic when a woman decides to rent out her womb. Fees typically vary from $20,000 to $45,000 and up with an admin fee of $16,000 to $24,000.

With these kinds of figures, concerns about the legality, ethics and taxation come up for debate — and with our legal system the way it is, there appears to be only a handful answers.

Nevertheless, since the contractual aspects can render both parties (couple and surrogate) quite vulnerable, the legal side has been addressed and discussed at length in certain state statutes. In some states such as California it is legal and in others, it’s not.

The taxation side however, remains the poor relative; avoided, with no set standard of practice. The lack of clear guidelines in this area causes some agencies to issue a Form 1099 MISC to surrogates and others not.

 But should surrogacy be considered akin to contracting for employment/labor and thereby taxable?  Or be viewed as a "gift" to otherwise childless couples? How that question is answered has far reaching implications.

Supporters of the non taxable stance remind us that women’s rights should be free from government interference. Taxing their income would feel intrusive, insulting and may deter women from partaking in the process.

A glance at surrogacy chat boards  and other reports reveals that from  the surrogates viewpoint, many believe that they’re actively involved in "helping" and not "working," approaching surrogacy with a sense of altruism about their activities rather than running a "business." Although the money is an important role, there’s little evidence to suggest that these women are driven by materialistic gain.

Gail Sexton Anderson, Ed.M, of Donor Concierge.com, has been working in the surrogacy field for many years and points out that “for the amount of work that these women do, it breaks down to a few dollars per day”…. “These wonderful women more than earn their compensation for the wear and tear on their bodies and the strain on their families”.

But is it sound at both a social and fiscal level to tax surrogacy?

At a fiscal level, the accumulated loss of state income is arguable. If a fertility treatment such surrogacy is “outsourced” to places where the process is cheaper (as is the trend), the loss of revenue will eventually accumulate.

 At a social level, some say that there may be some important benefits to taxation. Namely, the intense discomfort that the general public has about surrogate motherhood could begin to change. Surrogates are often viewed as weird, misguided, “in it for the money” and coming from a financial ‘underclass’ (think of the movie Baby Mama). Taxing the income gained could be a way in which the value of reproductive work is finally given legitimacy. A full range of social, political and cultural shifts can begin to occur with this step.

Question:

 What do want to see happen here? Should surrogacy be taxed? Why?

Fenella Das Gupta is a licensed Marriage and Family Therapist ( #47275) working in Northern California, specializing in fertility counseling. She works with individuals and couples as they make their way through the fertility maze.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Longest Family in Electrical in Petaluma July 19, 2012 at 04:38 PM
If this service is a gift, why are they charging for the service? A job is a service you are doing or preforming for payment. So if this is a gift, why do they need to be paid? I am sure all of us out here would like to figure out how to preform a service for payment and not pay taxes. Unfortunately this is The United States of America, where we must pay taxes.
Fenella Das Gupta PhD Neuroscience, MFT July 19, 2012 at 05:14 PM
comments from Facebook: "of course it should! if something is for profit it should bet taxable!" "A nice loophole --a certain amount could be considered a "gift"... A married couple can pool their individual gift exemptions to make gifts worth up to $26,000 per recipient per year without incurring any gift tax. "
Jenny Gunderman July 19, 2012 at 07:56 PM
I agree with the concept that if someone makes a profit then they should pay tax on that profit. I have no doubt that most if not all surrogates do this at least partly from a sense of altruism, but if it were solely from the kindness of their hearts then making a profit would be unnecessary. If a surrogate were asking for nothing more than covered expenses (example: doctor appointments, medications, etc) then I would agree, don't tax them, it's an act of charity.
Fenella Das Gupta PhD Neuroscience, MFT July 19, 2012 at 10:05 PM
Dear Jenny This is such excellent commentary . Thank you for.adding to this piece. Fenella
Fenella Das Gupta PhD Neuroscience, MFT July 20, 2012 at 04:20 PM
A Facebook comment: "well if you treat it like being a contractor, then given that it is a full time job, the pay rate of several hundred pounds, dollars or euros a day will then need to have overtime (i.e. 3 days pay for every 24 hours) and double time at weekends!! the surrogate would be happy to pay taxes under those T&Cs!!"

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