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New Member
posted Jun 4, 2019 4:15:47 PM

Is oil royalty taxed on only 1/2 the income received as it appears on my form?

I enter the full amount but only 1/2 the amount shows up in the block and I can't  change it.  A flag comes up and says I input the full amount in, but the display still shows 1/2 the amt.. When I view the print form 1/2 the amount still shows.

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1 Best answer
Level 15
Jun 4, 2019 4:16:02 PM

When going through the Royalty interview you should encounter a screen that asks you if  you own all the income that you are reporting.    If you were to select "No", then it asks you if you want TurboTax to calculate and asks you for a percentage.  That would be less common.  Most people reporting royalty from a 1099-MISC own all of the royalty payments that are shown on their form, but it depends on your situation.

See below:

13 Replies
Level 15
Jun 4, 2019 4:15:49 PM

Did the  royalty come on a K-1?   Did you review the Sch E ?

Level 9
Jun 4, 2019 4:15:51 PM

Did you say you own 50% of the activity?

New Member
Jun 4, 2019 4:15:52 PM

My wife does own 1/2 and her brother owned the other 1/2.  We reported only the amount received from the Oil Company on your forms.  We have no records of what her brothers family received.  The distribution of the Royalty funds is done by the oil company. We received a form in Lieu of form 1099.

New Member
Jun 4, 2019 4:15:53 PM

The only number that looks like it might be a form number is "EIN: 48-034003 " which is likely a company form  not a K-1.

Level 15
Jun 4, 2019 4:15:55 PM

That EIN looks like it could be the tax number of the oil company, not a form number.  You'll need to report that tax number when you report the royalty income.     Did you receive a Form 1099-MISC for the royalty payments, and do you own all the income reported to you on the Form 1099-MISC by the oil company?  Normally, it's the oil company who splits the royalty payment per a division order before it goes out to the various royalty owners.  

 Sometimes, instead of the classic-appearing Form 1099-MISC,  the oil companies may use a "Substitute 1099-MISC" or a customized form which has the Form 1099-MISC info but with descriptions as Box 1 rents, Box 2 royalties, etc. and also shows other deductions which you might be able to use (productions costs, marketing, severance and other production taxes, etc.)

 TurboTax asks you if you own all of the amount you are reporting, or whether you own a percentage of what is shown on your form..   If you own all of the amount reported to you by the oil company, you don't further reduce it.    TurboTax does ask a question about whether you own all the property or not.  But it's referring to your interest in the property, not whether you own the total property.

Did you incorrectly tell TurboTax that you only owned 50% of the royalty payments you received when that is not the case?   I can make you a screen shot if you need to see that screen.

New Member
Jun 4, 2019 4:15:58 PM

I revised my Schedule E. Thank you for your assistance.  Helpfull

Level 15
Jun 4, 2019 4:15:59 PM

You're welcome.  I'll go ahead and post a screen image below that you should have encountered.   The image I post is from the Home and Business/Self-Employed version.  I see you're using Premier, so your screen may look a little different.

BTW, you mentioned "revised my Schedule E."  Are you using the desktop version (CD/download) or the online version, or the Mobile App?  If you are using the desktop version, are you trying to make entries/revisions in Forms Mode?   You should be using the interview mode in most cases to avoid any problems and using Forms Mode for confirming things or troubleshooting only.

New Member
Jun 4, 2019 4:16:01 PM

Revised on desktop version in forms mode but verified in interview mode . Completed fed and filed.  Thanks for your help.

Level 15
Jun 4, 2019 4:16:02 PM

When going through the Royalty interview you should encounter a screen that asks you if  you own all the income that you are reporting.    If you were to select "No", then it asks you if you want TurboTax to calculate and asks you for a percentage.  That would be less common.  Most people reporting royalty from a 1099-MISC own all of the royalty payments that are shown on their form, but it depends on your situation.

See below:

Level 15
Jun 4, 2019 4:16:03 PM

I agree ... you own 100% of the K-1 income that was reported to you ... you didn't split the one K-1 with someone else.

Level 15
Jun 4, 2019 4:16:05 PM

It may be a customized "Substitute Form 1099-MISC" sent from the oil company.  It's not uncommon for oil companies to customize their 1099's.  But the principle is the same.

Level 1
Feb 25, 2020 1:23:29 PM

So my 1099 misc from the oil company is Substitute it has gross taxes expenses net but not boxes and so I don't know where to put the information  At the bottom it does list   Box2 royalties  Box 16  Utah is this all I need to worry about.  I do have 1620.20 in expenses it also asks for an address, but it is coming from 4 different pieces of land and I don't have the address.  It is the royalties I inherited from my parents. 

Expert Alumni
Mar 1, 2020 3:15:05 PM

It depends. Yes, that is a good place to start by reporting Box 2 and Box 16. 

Addresses for your expenses coming from four different pieces of land, if you have property tax bills, you could use the addresses from these locations, or if you don't have that, you can use your own address. 

 

Click this article for a great walk through about how to enter 1099-MISC for Royalties when you also need to capture expenses.

 

For more information about filing Utah taxes, click the link for 2019 Utah Individual Income Tax Instructions.