Schedule E rental income and royalty income, do I need to prepare two worksheets?

[DanielV01]

When you go to the Rental Income section of the program, it will first ask you about Royalty Property, which you can enter in.  Afterwards it will ask you about your Rental Property.  They are reported on two separate sections of Schedule E, but they are somewhat grouped together in the same area of the interview.

[maria-elizondo]

Thank you Daniel.  This is what I have done but after requiring me to review, it gives me the statement: Income from Rental Real Estate & Income from royalties must be reported as separate properties on Schedule E.  It wants me to change/delete the rental income $ reported on 1099MISC.  Don't understand what I need to do.

[DanielV01]

First you must enter the information reported on your Royalties, and only answer questions regarding the royalties.  Once you get through all of that, you can click to Add Another Rental or Royalty, and then enter the Rental Property information separately.  If you didn't do this originally, delete your original entries and use that method.  Feel free to comment back if you get stuck.

[maria-elizondo]

Thanks again.  Now it added a "Self Employed" section.  I am confused on why now it is considering I am self employed.

[DanielV01]

That can depend on the nature of the Royalties.  Where did the royalties come from?

[maria-elizondo]

TEP Barnett - gas and oil royalties

[DanielV01]

These should go to Schedule E and not Schedule C if you have answered the interview questions correctly.   Make sure you have selected that it is Oil and Gas Royalty.  You do get to count depletion expenses against it, but Self-Employed shouldn't generate.