It depends. A Form 1099-NEC indicates you are involved in the production of the oil & gas well. This income must be reported on Schedule C as business income as opposed to royalty income. Expenses are allowed on the Schedule C to reduce the income.
For royalties that are not part of the production income, this is reported on Schedule E and the percentage or cost depletion is allowed as an expense. Most people use the percentage depletion of 15% for oil and gas wells.
If any expenses were not deducted in a prior year you can amend your prior year returns to include them. Likewise, if the income was not reported correctly, you can adjust that as well.
To amend your tax return use the link below and be sure to read all the information before you begin so that TurboTax knows the original figures and the changed figures:
When you are ready enter the Form SSA-1099 by taking the steps below.
- Search (upper right) > royalties or schedule c > Click the Jump to... Link > begin the entry of expenses or income
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