I have a Substitute 1099-Misc Royalties 2176.21 can I deduct the Production taxes, 77.84 and the Other Revenue Deductions, 765.49?

[PatriciaV · Accepted solution]

Yes, Royalty Income and Deductions are reported on Schedule E (Rental Properties & Royalties), even if you do not own the property.

To easily find this area of TurboTax, use the Search box at the top right corner of the TurboTax header and enter "royalties". Click on the "jump to royalties" link to be taken directly to this area of the program. 

Follow the interview process to enter your Royalty Property, along with income reported on Form 1099 and any property taxes you paid. "Other deductions" reported on the 1099 (example: production taxes), are entered under "More Expenses" in the extended interview. See the screenshot below for an example of a 1099-MISC entry for gas royalties.

If TurboTax prompts you to enter an address for the property, use the actual address if you know it (look on the property tax bill if you have one). Or use your own address. The IRS instructions say address lines 1 and 2 should be left blank, but sometimes the program won't let you continue without an address.