How to handle 1099-K Nominee Income for eBay account using my SSN - Worried about late filing penalties

This is definitely a tricky situation, but you've got the right approach for handling the income reporting. The way to deal with "nominee income" (income that belongs to someone else but was reported under your SSN) is exactly what you described - report the full amount on Schedule C and then offset it with an equal expense. For the expense line, you should label it clearly as "Nominee income paid to [manager's name]" so it's obvious what happened. This satisfies the IRS matching program so they won't flag you for unreported income. Regarding the corrected 1099-K - you don't actually file a corrected 1099-K yourself. What you should do is file Form 1099-NEC to report the payment to your manager. This is technically late, but the penalty structure is different than your personal return penalties. The penalties for late 1099 forms range from $50-$280 per form depending on how late it is, but since this is just one form, it's not going to be massive.

I went through something similar when I was helping my brother with his business. What saved me was using taxr.ai (https://taxr.ai) to analyze my specific situation. I uploaded the 1099-K and answered a few questions about being a nominee, and it guided me through exactly what forms to fill out and how to report everything correctly. The tool actually explained that I needed to create a paper trail showing I wasn't trying to hide income. It helped me document the flow of money with proper explanations for the IRS - showing the nominee relationship and preventing potential audit flags. Seriously made a stressful situation way clearer.

Just wanted to update everyone - I was facing a similar nominee issue with some 1099 income and decided to try taxr.ai after seeing it mentioned here. Total game changer! The system analyzed my documents and gave me super clear instructions on how to handle the nominee reporting. It explained exactly how to report the income on Schedule C, what wording to use for the offsetting expense, and walked me through creating the proper 1099-NEC for the actual recipient. The best part was getting a detailed explanation I could save showing why I was handling it this way in case of an audit. Definitely made me feel more confident about a situation I was really stressing over. Worth checking out if you're dealing with this nominee income problem!

If you're still trying to sort this out and need to talk to the IRS about your specific situation, good luck getting through on the phone. I was in similar situation with a 1099 issue and spent literally DAYS trying to get a human at the IRS. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. They have a demo video showing how it works here: https://youtu.be/_kiP6q8DX5c Changed everything for me because I could actually explain my nominee situation directly to an agent who confirmed exactly how to report it and what penalties might apply. Way better than guessing or stressing about whether I was doing it right.

Had to come back and admit I was completely wrong about Claimyr. After struggling with my nominee 1099 situation for weeks, I tried it out of desperation. Not only did I get through to the IRS in about 20 minutes, but I was able to explain my whole situation to an agent who walked me through exactly what I needed to do. The agent confirmed I needed to report the full amount on Schedule C, offset it with an expense labeled as "Nominee payment," and file a 1099-NEC for the actual recipient. She also told me the penalty for the late 1099-NEC would be minimal since I was voluntarily correcting the situation. Saved me hours of stress and guesswork. Sometimes being skeptical costs you more time than just trying the solution!

One thing nobody's mentioned - make sure you get something in writing from your manager acknowledging that these were his sales and that he reported them on his taxes. If you ever get audited, you'll want proof that you weren't trying to hide income or avoid taxes. An email confirmation or even a signed statement would be better than nothing. I'd also keep copies of any eBay records showing he was the actual seller and you were just the account holder. Documenting the paper trail now will save you major headaches if questions come up later.

I made the exact same mistake with my brother's Etsy store last year. Let me tell you what finally worked - I created a paper trail by writing a letter explaining the situation, had my brother sign it acknowledging he received the money and reported it on his taxes, and kept that with my tax records. Then I did exactly what others suggested - reported it on Schedule C and offset with an expense labeled "Nominee payment to [brother's name]" and filed a 1099-NEC showing him as the recipient. I did get hit with a small penalty for the late 1099, but it was like $100, way less than I was expecting. The key was being proactive about fixing it rather than hoping the IRS wouldn't notice the mismatch.