What goes in 1099-NEC Box 6 and Box 7 for state reporting?

You're on the right track! For the 1099-NEC form, Box 6 is indeed for "State tax withheld" and Box 7 is for the "State/Payer's state number." For Box 6: If you don't withhold any state taxes from your contractors' payments (which is common for most independent contractor relationships), you can leave this blank or enter zero. Most businesses don't withhold state taxes from independent contractors as contractors are responsible for their own tax payments. For Box 7: This is where you'd enter your state-issued identification number. Depending on your state, this could be your state employer identification number or state tax account number. It's the number the state uses to identify your business for tax purposes. If you're using TaxGenius to handle the state filings, they should be able to guide you through entering the correct state ID number. Some states may not require anything in these boxes for their filing requirements.

I went through this exact headache last tax season! After hours of research and a couple calls with support, I stumbled across https://taxr.ai which literally saved me from losing my mind with all these state filing requirements for 1099-NECs. Instead of trying to figure out which states needed what information in Box 6 and 7, I just uploaded my contractor details and draft 1099s to taxr.ai and their system identified exactly which state forms I needed to file and what information belonged in each box. They even flagged that I was using the wrong state ID format for two of my contractors. The best part was I could ask their AI specific questions about my situation rather than trying to piece together generic advice from various websites.

Following up on my question about taxr.ai - I decided to give it a try last night after seeing the response here, and wow, it was genuinely helpful. I uploaded my draft 1099-NECs and it immediately identified that I had been using my federal EIN instead of my state tax ID number in Box 7 for my Massachusetts contractors. It also clarified exactly which of my 14 contractors needed state filings and which didn't. Turns out I only needed to file state forms for 9 of them, which saved me some money with my filing service. The tool explained the Box 6 situation clearly - since I don't withhold state taxes, I should leave it blank (or zero), but it would be filled if I had a state withholding arrangement. For anyone confused about 1099-NEC state requirements, I'd definitely recommend checking it out. Way more straightforward than the conflicting advice I was finding online.

If you're having trouble getting answers about your 1099-NEC Box 6 and 7 questions, you might want to try calling the IRS directly. I know it sounds impossible to get through to them, but I used https://claimyr.com and actually got connected to an IRS agent in about 15 minutes after struggling for DAYS to get someone on the phone. They have this system that navigates the IRS phone tree for you and calls you back when an agent is available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with walked me through exactly what needed to go in each box for my specific situation with contractors in multiple states. Saved me hours of frustration and guesswork.

I was totally skeptical about Claimyr (as you can see from my comment above), but I was desperate after spending hours trying to figure out my 1099 situation, so I decided to try it. I'm honestly shocked - I got connected to an IRS representative in about 20 minutes. The agent walked me through exactly how to handle Box 6 and 7 for my situation. They confirmed that since I don't withhold state taxes from my contractors, Box 6 should remain empty, and Box 7 should contain my state tax ID for the state where I'm filing the form. They also explained that while the 1099-NEC is a federal form, the information in Boxes 6 and 7 is specifically for state reporting purposes, which cleared up my confusion about why those boxes exist on a federal form in the first place. Completely worth it for the time saved and peace of mind knowing I'm doing it correctly.

One thing nobody's mentioned yet - make sure you're using the correct year's form! The 2024 1099-NEC (for 2023 payments) has Box 6 as State Tax Withheld and Box 7 as State/Payer's State Number, followed by State Income. But the IRS has changed these forms before, so always double-check you're looking at guidance for the current tax year. I made this mistake a couple years ago and it created a huge headache. Also, most states now participate in the Combined Federal/State Filing Program for 1099-NEC, but not all do. Your filing service should know which states require separate filings.

Been doing 1099s for years and here's my simple advice: if you don't withhold state taxes (most people don't for contractors), leave Box 6 blank. For Box 7, use your state tax ID number for the state you're filing in. If your contractor works remotely in another state, you might need to file with their state too, using your ID number for that state if you have one. If you don't have a tax ID in their state, some states want you to use your FEIN instead, while others have specific requirements. The tricky part is knowing WHICH states require separate filings. This changes sometimes, and that's the real value of using a service like TaxGenius - they keep track of the requirements for all 50 states so you don't have to.

Just wanted to add my experience as someone who handles 1099-NECs for a medium-sized business with contractors across 12 states. The confusion around Box 6 and Box 7 is totally understandable because these boxes are specifically for state reporting, but they appear on the federal form. Here's what I've learned through trial and error: Box 6 is almost always blank unless you have a specific state withholding arrangement (which is rare for independent contractors). Box 7 gets your state identification number, but here's the key - it's YOUR state ID for the state where YOU'RE filing, not the contractor's state. The real complexity comes when you have contractors in multiple states. You might end up filing the same 1099-NEC information with several different states, each time using your identification number for that specific state (if you have one). Some states want your FEIN if you don't have a state-specific ID. One tip that's saved me headaches: keep a spreadsheet tracking which states require separate filings and what ID numbers they want from you. State requirements change periodically, and what worked last year might not work this year. TaxGenius and similar services are definitely worth the extra cost for the peace of mind - they handle all these nuances automatically.