Husband got 1099 k for payments received for his High school reunion since he opened the account. Why does he have to declare as income when he didn't get any money?

[catorina]

My husband was not involved in the finance end of things. He was asked to open the Paypal account only. We did not have any financial gain from these payments.

[maglib]

The 1099-K is informational.  

I'm assuming the paypal account was not in the schools name or was using your husbands SSN?  It had no personal records?

1. Create a 1099-K for the actual entity that received the funds.

IRS RULES (ignore the fact it says CC terminal as that just means processing company):
If you shared your credit card terminal with another person or business:

• If you shared your credit card terminal with another person or business, your Form 1099-K will include payment card transactions belonging to the person or business that shared your terminal, in addition to your own payments. Where required, you should file and furnish the appropriate information return (e.g., Form 1099-K or 1099-MISC) for each person or business with whom you shared a card terminal. The information return should include the total payment card transaction amount in addition to any other income belonging to the other person or business. You should retain records of payments issued to each person or business sharing your terminal, including but not limited to shared terminal written agreements and cancelled checks.  

2. Sadly he must report it as income and then create an opposing amount to remove it with an explanation.

STEP 1:To enter/edit a 1099-k form:

• Open (continue) your return if it's not already open.
• In the Search box (top right-hand corner), type “1099-k’
• Click on the Magnifying Glass icon.
• Click on “Jump to 1099-k” link high-lighted in Blue.
• Answer the Step-by-step instructions. Enter as Miscellaneous Income.  (being removed later in step 2 with same directions)

STEP 2: and make adjustment using the steps below:

1. Federal taxes
2. Wages and Income
3. Scroll down to Less Common Income
4. Select Miscellaneous Income.
5. Select “Other reportable income”, click ‘Yes’ and you will be prompted to enter Description and amount. Please be sure to write a short explanation such as 1099-K Nominee for XYZ School and enter the amount as a negative number.   At this point, the form 1040 will show full amount as taxable AND as a negative adjustment on line 21. The end result: form is reported but not taxable

[catorina]

Thank you! We live in Massachusetts and they got over $600 in payments which is why he was sent the 1099K. They didn't realize the Mass Law had changed as they were well under the Federal limits.