Filing 1099-NEC from California to Contractors in AZ/NY/CO - How to Complete Boxes 5-7?

You're asking a good question about boxes 5-7 on the 1099-NEC! Those boxes are for state tax reporting. As a California individual paying contractors in other states, you generally only need to report to California (your state) and possibly the states where the work was performed. For Box 5, enter the two-letter state abbreviation (CA for California). Box 6 is for your state tax ID number - you'll need your CA state employer account number here. If you don't have one because you're not registered as an employer in CA, you might need to register with the California Employment Development Department (EDD). Box 7 is for the amount of the payment that's reportable to that state. For out-of-state contractors, you typically don't need to file 1099s with their states unless you're doing business in those states or have some other filing requirement there. The contractors themselves are responsible for reporting their income to their home states. Since you're not withholding taxes, that part is straightforward - you're just reporting the payments you made, not handling state tax withholdings.

I was in almost the exact same situation last year! I'm a California wedding videographer who hired assistants in Nevada and Oregon. I spent hours trying to figure this out, getting different answers from everyone until I found taxr.ai at https://taxr.ai which actually analyzed my specific situation. Their AI reviewed my contracts and payment details, then explained I only needed to report to California as a CA-based individual contractor. They showed me exactly how to fill out boxes 5-7 on the 1099-NEC - basically putting CA in box 5, my state ID in box 6 (which I didn't have so I left blank), and the full payment amount in box 7. What was helpful is they showed me examples of correctly filled forms for my specific situation, so I knew I was doing it right. They also confirmed I didn't need to file in Nevada or Oregon since I don't have business presence there. Saved me from registering unnecessarily in multiple states!

I just wanted to follow up about my experience with taxr.ai after being skeptical in my previous comment. I decided to try it for my situation (I'm a graphic designer in Oregon hiring people in different states), and I was really impressed with how thorough it was. I uploaded my contractor agreements and payment records, and the system immediately identified that I had one contractor who might actually be classified as an employee under Oregon rules (saved me from a potential misclassification issue!). It walked me through exactly how to fill out boxes 5-7 for different states and gave me customized instructions for my situation. The thing that really surprised me was when it flagged that one of my contractors lived in a state with special reporting requirements I hadn't considered. The analysis included links to official state resources and suggested timeline for compliance. Not just generic advice but specific to my exact contractor situation.

Hey! I had this EXACT problem last year with NY and FL contractors. After trying to call the IRS 12 times and never getting through, I almost gave up until someone recommended Claimyr at https://claimyr.com and their service got me connected to an actual IRS agent in under 45 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that as a CA individual (not a business entity), I only needed to worry about CA state reporting. They said boxes 5-7 are primarily for entities registered as employers in multiple states. For my situation as a freelancer, I just put CA in box 5, left box 6 blank (since I don't have a CA employer ID), and put the full payment amount in box 7. The agent also assured me that my contractors were responsible for reporting the income to their respective states - I didn't need to file 1099s in their states unless I had a business presence there. Saved me so much stress!

I need to apologize for my skepticism about Claimyr in my previous comment. After struggling with this exact 1099-NEC state reporting issue for weeks, I broke down and tried the service yesterday. Within 37 minutes (I timed it), I got a call back with an actual IRS representative on the line. She patiently explained how boxes 5-7 work for someone in my situation (I'm in Washington hiring people in Oregon and Idaho). The agent confirmed I only needed to file state info for Washington since that's where my business is registered. What really impressed me was that when I mentioned previous confusing advice I'd received, the agent took the time to explain why there's so much contradictory information out there and which guidelines specifically applied to my situation. She even emailed me relevant documentation while we were on the call. I've literally been trying to get this information for months. Should have used this service sooner.

One thing nobody mentioned yet - make sure you're filing these 1099s on time! The deadline for sending 1099-NECs to contractors is January 31, and the deadline for filing with the IRS is also January 31. There are serious penalties for late filing. Also, double-check your contractor's information before filing. Make sure you have the correct spelling of their name, correct address, and most importantly, the correct TIN (tax ID number or SSN). If this information doesn't match what the IRS has on file, you could get hit with TIN validation penalties.

Does anyone know if you need a SEIN (State Employer Identification Number) in California just to issue 1099s? I'm in the same boat - freelancer in California occasionally hiring other freelancers, but I don't have any employees. Getting conflicting info about whether I need to register with EDD just to issue a few 1099s.