Is there a tax difference between doing one paid medical trial study and doing two of them?

Question

I live in the U.S., and I recently participated in a medical study for which I was paid about $5,000. Basically, you are given a trial drug (mine was a generic arthritic pain reliever) and you live in the medical facility for a week or so, with your blood samples taken every so often.

I'm considering doing another one, but a friend of mine mentioned that I might have to pay tax on the amount I earn differently if I do two studies rather than one. He said he thought that if I do only one,II would only pay tax similarly to what it would be if I earned it at a regular job. But if I do two or more, I would have to fill out my federal tax return differently and end up paying tax as if it were a business venture (I would owe far more).

Obviously, I'm less inclined to do another study if I'll take a major hit in taxes on both studies. I'm not asking for any concrete tax advice here, I'm just wondering if there's any validity to what my friend says about doing one versus two.

Wayne: Yes, I know that it is taxable no matter how many times I do it.. My friend wasn't implying that it isn't. He just think it's taxable in a different way if you do it multiple times. As in, one time is an isolated event whereas two or more times becomes a business venture, and the federal tax system would therefore treat it differently (i.e. more tax).

Answer 1

Your friend is wrong.

Even if you just to the one study, it is taxable. You could do 1, 2 or 10. They are all taxable the same way.
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I am not sure as to where your friend got the idea that multiple studies would be taxed differently than 1. For example (assuming all other tax items are the same):

Person A: 1 study for $5000
Person B: 2 studies for $2500 each ($5000 total)
Person C: 5 studies for $1000 each ($5000 total)

Each of the above people would pay the exact same tax.

When it comes to income taxes, there is a lot misinformation out there. Much of from "friends". Your best bet is to contact a tax professional in your area and ask.