If boxes 5 and 6 are blank, then also leave box 7 blank, You can safely ignore the number in box 7 as there is no state tax withheld in box 5.
But if box 4 (federal tax withheld) is also empty, and I don’t report the income by putting zero in box 7, aren’t I at risk of being penalized for not reporting income that was already shared with the IRS?
Box 4 does not affect box 5-7.
Which state do you live in? Which state did you earn this money in? Were they the same state? If you lived and worked in the same state when earning this money, whether you leave boxes 5-7 blank or not will not affect anything. When you go through your state return, it will pull this income and then ask if this income should be included.
Box 4 being empty just means, there was no income tax withheld. This is quite common on the 1099-NEC.
We live in WA, my wife earned the money speaking/teaching in TX, and the organization that paid her is based in IL. WA has no state income tax, so my concern is federal taxes.
Even if you have no state information, and you have no federal withholding, you will have to report the Form1099-NEC. Form 1099-NEC is used to report nonemployee compensation. When you enter it on your return, just enter the amount on box 1.
For more information see the following TurboTax help article below:
How to File Taxes with IRS Form 1099-NEC
Hello and thanks for the help in advance! My Form 1099-NEC only contains info in boxes 1, 6 (state only, no number) , & 7. Upon the 'review' your program is telling me I need info for boxes 5 and Box 6 for 'State Number'. Again, those boxes are blank on my end. How do we move forward without that info?
Since there were no state taxes withheld on your form, just delete the name of the state shown in box 6 to eliminate the error condition to move forward.