Need a Sch C for royalties?

[KarenJ · Accepted solution]

Royalties are reported either on Schedule C or Schedule E.  

In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040).

[ebardach]

Thanks for this.  I hope you don't mind a further inquiry.  I am a retired prof at UC Berkeley.  I still get royalties from a book published some 20 years ago.  I report them on Schedule E.  In the last few years Turbotax also insists I report them again on Schedule C.  And it counts them twice in income, and seems to tax them twice.  Does the tax code really want this?  Is there some glitch in Turbotax?  If they are only supposed to be counted once, what is the way around this?

[douglasstax]

One more thing to add-if you overpaid (paid taxes on royalties income in two locations on the return) in prior years you can file an amended return and request a refund of the overpaid tax.

[Carl]

I still get royalties from a book published some 20 years ago.

That gives me the impression you are not "in the business" of writing books, and that it's not your primary source of income. So that would be reported on SCH E.

In the last few years Turbotax also insists I report them again on Schedule C.

Never heard of that in my 18 years of using the program. It's one or the other. But never both SCH C and SCH E. In general, royalty income reported in box 2 of the 1099-MISC is reported on SCH E, unless you are "in the business" of writing books, and that is the primary source of your income. If the income is reported in box 2, the program will "force" you to the SCH E - even if you've entered it in the SCH C section of the program. It takes a bit of finagling for one to force box 2 income, to the SCH C.

[cjtax55]

Should I still use Schedule C for royalties from an invention after I am retired and no longer in that business?

[CatinaT1]

No. It's not your primary source of income, and you are not in the business of making inventions. You will use Schedule E, as Carl says above.