Investors & landlords
It depends. You would enter the information FIRST in the federal return in your desktop version according to the steps I listed above, which includes the steps where you would enter your Oklahoma taxes withheld in Boxes 16-18. This information along with all your other income will populate in your Oklahoma non-resident return. You do not need to make any additional entries in your federal return.
Now when you prepare your Oklahoma non-resident tax return, you will allocate income that is Oklahoma income. in the allocations, all income will be mentioned. For the income that is excluded, leave those screens blank. The only income that will be recorded as Oklahoma income will be your royalty income that was already reported in your federal return. The amount allocated should be allocated here is your Royalty income minus the 15% depletion.
Now, i need to change my original answer regarding the 7% additional depletion allowance for Oklahoma. This will be entered as an Oklahoma subtraction because this will subtract rather than add to your Oklahoma income. First remove this from "Recapture of Depletion and/or Add Back of Excess Federal Depletion". We don't want this added to your income, but as a reduction because of the additional 7% allowance.
- Now go to the forms mode in your Turbo Tax program.
- Go to Schedule A-H in your Oklahoma State return of your software in the Forms mode and add $84 in Line 8 of this Schedule 511-NR-B Oklahoma Subtractions. Enter $84 in both columns.
I think also this you may have indicated this is a rental. It's not a rental, it is a royalty. This may be the reason why your depletion% is not being accounted for. Please review all your entries in your 1099 MISC section in the federal return and make certain where it asks what of income it is, indicate it's royalty income. Also there should be a screen that asks what type of royalty income it is, indicate it is Oil and Gas. This way, you will receive the 15% depletion allowance in your federal and state return.
Once everything is reported and done correctly, this is what your Form 511 NR form should look like this in the forms mode. Your overall income is not what is shown here but this does reflect Oklahoma source income in Box 4, which represents the $1200 income minus the 15% depletion percentage. Line 5 represents the additional subtraction that is the difference between the federal depletion and the additional Oklahoma depletion allowance. Here is the screenshot and how this is to appear in your return. Don't be concerned if all income is showing because your final return results because your Oklahoma tax is based on the percentage between Oklahoma based income and your overall income for the year. Your taxable income, if this is prepared correctly is $936, which represents your Oklahoma Sourced income.
