This probably was not well planned out because this must be reported like this is a business. Since you took in merchant card payments, you received the 1099K. IRS will think this is a business even though it was a temporary venture to raise money for your coworker to pay for their medical costs. Regardless, since you received the 1099 K, you need to report it as a business in TurboTax Self-Employed just so you can claim that all the money went to co-workers and that you didn't profit from any of these payments.
To report your 1099K income, go to:
1) federal>income and expenses>Self-employment income and expenses. If you don't see this immediately on the screen, you may see a tab that says show all income. Select that if you see it.
2) It will first ask you if you had self-employment income and expenses. Say "yes" to this.
3) It will then ask you about your venture and you may give it a description such as Fundraising. It will ask you some generic questions about your venture and read the question carefully and then answer it them so you can get to the main source of the questions
3) After your profile is complete, you will reach a screen that says, Let's enter the income for your Fundraising work. in this section you will select, "Other self-employed income. Includes 1099-K, cash, and checks"
4) Next screen is entitled "Tell us about the other self-employed income for your Fundraising work" here you would enter that this is 1099 K income and then report the amount that was listed in box 1a and 1b. You don't need to enter the code in Box 2 because this is a merchants code.
5) Next you will want to report that the entire amount of income was paid out to your co-workers. Once you get to the expenses, you can label these as miscellaneous expenses and give it a title such as " donation to co-worker's medical expenses." and expense the entire income.
This is the only way i can think of the report a 1099 K. If you would have planned this better, you could have formed a temporary non profit company, applied for an EIN from the IRS. That way your 1099 K would have been issued in the name and the EIN of the non-profit and would have been filed on a Form 990 rather than on your own tax return. In fact, if you plan on doing this in the future, you may wish to go ahead and set yourself up as a non-profit organization. I can't advise you how to do this but you can do your own research.
Also, if the IRS questions you about this reporting, keep a copy of the payment you made to your co-worker.
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