It depends. If the deductions are related to the income you can choose to do the offset. Or you can enter the full income and then enter the expenses in the Schedule E.
- TurboTax Online: Select Tax Home (left panel) > Wages & Income > Scroll to Rents, Royalties, etc > Edit next to the royalty income.
- TurboTax Desktop: Search (upper right) > type royalties > Click the Jump to... link > Edit next to the royalty income
Whichever you decide be sure to keep 1099-MISC with your tax file.
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