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Old 05-18-2009, 07:10 PM
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Join Date: May 2009
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Medical Study Tax Question - ADVICE APPRECIATED!


I hope this email finds you well. I have a very important tax question (to me!) and I am unsure who else to ask. It seems that no one has an answer. Any advice appreciated!

I was laid off and seeking work in 2008 (and collecting unemployment.) To make extra money, I participated in a medical study and earned approx. $4300.

So, now I am filing through Turbotax (I filed an extension until I can get this figured out) and trying to determine how to approach the 1099-MISC the clinic sent me.

At first they put the income in box 7 (non-employee compensation.) However, new IRS tax rules state to put the income in box 3 (other income) so I had them send me (and the IRS) an updated 1099-MISC.

So my question is this:

I have a choice in Turbotax to select "I performed services for this payer" or "I did not perform services for this payer."

If I select the former, the progam tries to adjust this income as self-employment income which is a problem for 2 reasons. For starters, I made less then $12K for the year when you combine unemployment and the clinical trial income so I do not have the money to pay much taxes on it. More importantly, if I file this as self-employment income I fear that I will get in trouble with the IRS as you cannot be involved in self employment (I never thought that the study income could be calculated as such)and collect unemployment.

So my thought is to select "I did not perform services for this payer" which does not file the income as self employment.

However, I don't want to lie and get in trouble if the IRS considers that, when you are involved in a medical study, you did perform services...

Anyway, any thoughts on how to approach this appreciated. A lot of guys who do studies don't file at all...I just want to do what is right without getting in trouble.

Thanks in advance for any insight. It is appreciated!


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