Turbotax won't let me proceed because it thinks my rental property is a royalty property

[alexdunn11]

how do i fix rental versus royalty property?

[PattiF]

If you received a 1099-MISC that reported rents that you received in box 1, you should check how you entered the form. If you entered an amount in Box 2, that would be for a royalty.

[Carl]

Another thing also. If you received a 1099-MISC reporting rental income in box 1 *and* royalty income in box 2, you will need to enter the information "AS IF" you received two 1099-MISC forms... one reporting income in box 1 for the rental, and a 2nd 1099-MISC reporting income in box 2 for the royalty payment.

[ianrosaaen]

I completed the 1099-MISC for royalty income. I entered royalty income in box 2. I also identified the rental property to which the royalty is associated (required by the form). The royalty income correctly appeared in the Sched. E worksheet for a single-family rental property. TT thinks the rental is a royalty. Do you see anything I should do differently? Thank you.

[ianrosaaen]

Also, when I revisit "Wages and Income / Property Profile" for the rental property, I see an option to identify the asset as a royalty or a rental property. I select rental property, but nothing changes. The rental is still a royalty.

[JohnW152]

If this is rental rather than royalty income, you need to delete your Form 1099-MISC information and re-input it elsewhere. 

To delete information from Form 1099-MISC in TurboTax Online:

1. If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Income & Expenses on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit. 
   • Otherwise, in the left pane, select Wages & Income
2. Scroll down and select the Show more dropdown to the right of Other Common Income
3. Select  Revisit to the right of Form 1099-MISC
4. On the  1099-MISC Summary page, select Delete to the right of your Form 1099-MISC item
5. Select  Yes on the Delete Confirmation screen, then select Done when the 1099-MISC Summary screen reappears

Then, on the Your income and expenses screen:

1. Scroll down and select the Show more dropdown to the right of Rentals, Royalties, and Farm
2. Select  Start to the right of Rental Properties and Royalties (Sch E)
3. Answer  Yes on the Did you have any income from rentals or royalties? page 

Continue through the ensuing pages, providing all information as appropriate. 

Don't worry about Form 1099-MISC not being present. The IRS is looking for the amount, not the form.

@ianrosaaen 

[ianrosaaen]

John,

Thank you very much for your reply.

I downloaded the program. I'm not using the online version.

I deleted all 1099-MISC forms associated with royalty income.

I went to Federal Taxes, Wages & Income, Rental Properties and Royalties and followed the Update procedure

I went to Property Profile for the rental home. "Royalty property or payment" is selected. I changed it to Rental Property and continued through the forms.

I reach a screen that states, "What type of Royalty Income? It seems I can't change the asset from a royalty to a rental property.

I'm stumped.

[ianrosaaen]

HOLD IT.

I closed/opened the program a few times and it worked. All is well.

Thank you.