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xxFastEddie
New Member

eBay was sending payments to my mothers PayPal and not to mine, now a 1099-K

So for some reason ebay had the paypal email going to my mothers email when it should have went to my own.  Now she has a 1099K from Paypal saying she made $46K last year.  My parents file their taxes together and are both on social security.   I was looking online and found that there is something called "nominee payments".  Is this what they have to do to file their taxes?  Really need help with this and don't want to have them lose their SS cause it shows she made over the allowed $17K

2 Replies
DavidS127
Expert Alumni

eBay was sending payments to my mothers PayPal and not to mine, now a 1099-K

Firstly, check the “Payee’s TIN” on the Form 1099-K to verify to whom the payments were reported as “made to”.  If the TIN is yours, and not one of your parents, it will not matter that it came to your mother’s email.  If this is the case, there is no issue, and the IRS will expect to see that income on your tax return.

 

If the Form 1099-K was sent to the incorrect Payee/TIN (e.g., your mother) it will not impact that person’s social security eligibility.  A person can be on social security and earn extra money, but beyond a certain amount that social security income will be taxed.

 

Assuming the 1099-K was sent to the incorrect Payee/TIN, you should contact the Filer and ask for a corrected 1099-K.

 

If for some reason the eBay transactions were processed using your mother’s account instead of yours, and/or you are unable to obtain a corrected 1099-K, the “work-around” steps have previously been recommended by @maglib, and I’m repeating those steps (for your parents return) here:

 

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 highlighted in Blue.
  • Answer the Step-by-step instructions. Enter as Miscellaneous Income.  (being removed later in step 2 with same directions)

STEP 2: Make an 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 [your name] and enter the amount as a negative number.   At this point, the Form 1040 will show the full amount as taxable AND as a negative adjustment on line 21.  In other words, the "net" 1099-K income reported on the tax return will be "zero".

The end result: 1099-K form is reported by your parents, but not taxable. You will include the 1099-K income on your tax return.

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Critter
Level 15

eBay was sending payments to my mothers PayPal and not to mine, now a 1099-K

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