Thank you so much for your help maglib. I will go with the first option you suggested. I will file for an extension on my tax return and ask the payer to change my name on the 1099-MISC form to my parents name. I live in Washington State and we do not have state income tax here. Do I still have to file the 1099-MISC? Reason I asked was on the 1099-MISC form I received says "To be filed with recipient's state income tax return, when required."
"1 way: You would be a nominee recipient of the 1099Misc and would have to prepare a 1099Misc for your parents or get the payer to correct the 1099Misc and make it to your parents as that is simplest. You would have to report the amount on your return and create an offset with the words nominee income if they won't correct it.
Your parent then files the 1099Misc as income. Claims expenses of property on Schedule E.
This is simplest way. IRS can deem though it didn't happen if they ever follow the cash or look to the legal arms length transaction. Only the cash given to you would be reported as gift income then."
