Hello! I live and operated a business in WA state, as a webhosting company, for a client in TX, and he sent me a "combined tax statement for forms 1098, 1099, 5498 1099 -nec copy B" and it only has rows of blue and white lines. Under the column for IRS BOX #, it has 2 rows, "1" and "7", Nonemployee compensation, and State Income, and both amounts are the same. No state is mentioned. I understand neither WA nor TX has a state income tax, and my tax prep platform website has a dropdown box for a state to choose for boxes 5-7. Should I leave the tax state dropdown box empty since there's no state abbreviation on the 1099-NEC composite form and since, if I'm right, there's no need to designate either state since it's a moot point for state tax returns in any case?
Yes, leave the dropdown blank. And you are correct, there is no need for a state designation. Leave boxes 5, 6, and 7 blank.
Thank you! I admit I'm still a little confused, the page on the website where I enter my 1099-NEC asks me to enter it how it is on the form, and the composite 1099-NEC has a number in 'box 7' (even if the box is just a row named box 7), ...is it ok if I just put the numbers in boxes 1 and 7 as the form has them, and keep it how the 1099-NEC has it, while leaving the state dropdown choice empty?
No, just enter the Box 1 amount. If you put an amount in Box 7 (State Distribution), TurboTax will want a State associated with it.
What about for the same situation but in North Carolina (1099-NEC with two rows for Box 1 and Box 7 with the same amount in each, and no other Form Boxes)?
You can enter that form as it is stated. The entry in box 7 means there is income earned in North Carolina, which will need to be reported on a tax return for that state.
The TurboTax form is requiring info to be entered for Box 5 - State tax withheld, Box 6 - State, and Box 6 - State number.
Even though these Boxes are not listed on the 1099-NEC, do I need to enter "$0" in Box 5, "NC" from the drop-down in Box 6 - State, and perhaps just the Taxpayer I.D. No. (which is the SSN) in "Box 6 - State number?"
You can leave the box 7 entry blank if you are filing as a resident of North Carolina, then you don't need to bother with the other boxes. Just make sure the income reported in box 1 is listed on your state return.
If you are filing out of state, you can likely leave it blank as well, you just need to make sure when you do the state return you enter the income applicable to North Carolina on that return when you go through the state return in TurboTax. Otherwise, you can try what you suggest.