topic Is nonemployee compensation the same as state income? in Business & farm

Is nonemployee compensation the same as state income?

llindsey0913 — Sat, 01 Jun 2019 04:10:07 GMT

No, nonemployee compensation is when you were paid for se...

IsabellaG — Sat, 01 Jun 2019 04:10:09 GMT

No, nonemployee compensation is when you were paid for services and you weren't treated as an employee, with federal taxes and Social Security withheld from your pay. Contractors and freelance workers get this kind of pay. If you received a 1099-MISC with an amount in Box 7 for Nonemployee Compensation, you are generally considered to be self-employed. You would be subject to self-employment tax, which is for Social Security, as well as regular income tax.

Re: No, nonemployee compensation is when you were paid for se...

daylime — Mon, 30 Jan 2023 23:13:19 GMT

Just reviving this thread. On the 1099-NEC there is Box 1, non employee compensation, and then there's Box 7, state income. If I want to file 1099-NECs for several contractors who provide service to my business to both the Fed (IRS) and State (DOR), do I need to fill in Box 7? Or does the state just use Box 1 when determining the compensation paid to the contractor, whether federal or state? According to the expert reply above, even if I'm reporting to the State, I should not report the same non-employee compensation amount in Box 7. Maybe another way to ask the question is, what determine (a) if there should be an amount in Box 7 and (b) what that amount is?

Re: No, nonemployee compensation is when you were paid for se...

AbrahamT — Mon, 30 Jan 2023 23:35:18 GMT

There's usually no amount in Box 7. Whatever amount is reported in Box 1 is always carried over to the state tax

and the cx pays state income tax on that amount as well. Unless, there was state income tax withheld on this income, that would typically be recorded in Box 5. See HERE for instructions. Pg. 5.

Re: No, nonemployee compensation is when you were paid for se...

daylime — Tue, 31 Jan 2023 01:32:32 GMT

@AbrahamT , thank you! That makes sense. So do I even put my State/Payer State No (which I believe is simply my TIN) in Box 6 even if there's nothing in Box 7? Should I be reporting $0 in Box 7 or leave blank? Thank you!

Re: No, nonemployee compensation is when you were paid for se...

ThomasM125 — Tue, 31 Jan 2023 02:28:03 GMT

You should just leave box 6 and box 7 blank if there is no amount in box 7.

@daylime