I am a new small business owner in California and my partner and I have contrary understanding regarding Boxes 5-7 of form 1099-NEC. We paid a lawyer $2,700 to prepare agreements for us last year and did not remit any tax to the state as withholding. So, my understanding is that we would leave boxes 5-7 blank - they are listed as optional for the IRS.
He believes we need to leave box 5 blank (so this is agreed), fill in box 6 with "CA ##-#######" (our EIN), and box 7 with $2,700 since it is subject to state income tax.
Can someone help me understand? Must we fill this in because it is information that the lawyer needs to prepare their tax - is that how it works?
[This year, definitely getting a CPA if the business takes off 🙂 ]
Thank you so much!
