Taxes, Compensation/Reimbursement & Maternity Leave

33 weeks…

Christmas decorations have been put away, confetti has been swept, bowl games have been won. While everyone trudges through the post-holiday letdown- working diligently on those New Year’s resolutions- W2s and 1099s are rolling in for dreaded (or not) tax season. Another one of the primary questions I get about being a gestational carrier- that goes hand-in-hand with asking how much I actually make- is ‘How is the money paid out, and how does it get applied at tax time?’ And this, my friends, is where things get a little less black and white…

As a gc, you are compensated/reimbursed for many things- clothes, mileage (if applicable), time off work (if written into your contract), additional medical procedures (DNC, c-sections, etc), and the delivery itself. At the beginning of the pregnancy, it is common for you to receive a set payment for the embryo transfer, positive pregnancy confirmed via blood test, and a clothing allowance. Depending on the language and structure of the contract, the gc will receive monthly incremental payments toward the total, and the remaining lump sum post-delivery.

Regarding the compensation/reimbursement amounts and tax liability, your best and safest bet is always to consult your accountant or call directly to the IRS (though you should be prepared to be given different answers if you call more than once). Semantics play a huge role here. Most carriers will say that the money received is not taxable because it is paid out for pain and suffering, or as reimbursement for food, clothing, housing, travel, etc. You do not (typically) receive a 1099 from your agency (if you are signed with one), and (at this time) the intended parents are not able to deduct their costs.

Although you are not keeping the baby, you will still be going through the same experience of pregnancy and childbirth (obviously)- whether the delivery occurs vaginally or via c-section- as you would if the baby was your own. Because of this, you are also still entitled to maternity leave, employed or not. Similar to tax consequences, these are i’s you want dotted, and t’s you want crossed prior to your final contract being written. You should check with your company’s HR to verify they will allow a paid leave per company and insurance policy. If you are not covered via your own insurance, or if you are self/unemployed, you can write additional amounts into your compensation to cover any downtime you experience. It is important to note that you can negotiate anything you want when the contract is being written (ie- child assistance if on bed rest, reimbursement for work missed and not paid, pumping breast milk, etc).

As you can see, when it comes to compensation/reimbursement received as a gestational carrier, there is more grey than black and white. There will be similarities among contracts, but unlikely that any two will be identical…just like the overall experiences themselves. My experience carrying this little lady is nearing its end, with just over 6 weeks to go. Until then, stay tuned while my family grows another…