Please follow the steps below to correctly report your royalty income:
- Open your return.
- Search 1099-MISC and select the Jump-to link.
- Enter your royalties in Box 2.
- Select Investment income from Property you own for the page titled Source of 1099-MISC Income (Although you do not own the property, you have mineral rights and receive royalty income from the property rights)
- Search for Schedule E and select the Jump-to link.
- Click Edit next to the Royalty entry.
- Answer the remaining on-screen questions.
Investment Income includes amounts received from oil, gas or mineral properties when natural resources are extracted from your property. These royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you.
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