It depends.
Use Schedule C if your royalty income is from natural resources that you extract from your property.
Use Schedule E if your royalty income is investment income from property you own, which includes natural resources extracted from your property by a third party who leases your property.
To quickly get to that section of TurboTax:
- With your return open, search for 1099-MISC and select the Jump to link in the search results.
- When you enter your 1099-MISC, enter the income in Box 2 - Royalties. On the following screen, choose the source of your royalty income, business or investment.
- Once you've selected the proper classification, continue with the onscreen interview until complete.
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