Employee Tax Expert

Investors & landlords

You should report the gross amount, then deduct the expenses against it to arrive at your net.  IRS does match the 1099Misc forms against their database and will be looking for the gross amount reported.

When you enter form 1099-Misc, you will be asked if the amount came as oil & gas royalty income.  Please continue through the interview, you will arrive at the screen calculating your depletion amount.  You will have an option on that screen (see attached picture) to select More Expenses.  Please select this option and continue through the interview one more time.  On your royalty's summary screen, select Expenses and you will be able to enter your own description of the expenses and the amount.

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