This should be reported as rental income and the Form 1099-MISC would have been the correct reporting form is you are not actively participating in the extraction of gas or oil.
First delete the form and then follow the instructions in the link to report the rental or royalty income. Royalties only occur if the extraction is actually taking place. Rental income is the category if there is a lease, without action of extraction right now.
Delete this form --1099-NEC----.
I reached out to the company and they say the 1099 nec is correct because I am a working interest owner but gave me no guidance on how to fill out a schedule c which turbo tax makes me do.
Anne61
When you enter the 1099-NEC, TurboTax will walk you through the questions needed to fill out the Schedule C. If you walk through the questions step by step, the form will be filled out for you.
If you have no expenses to report, then it is as simple as just filling out the 1099-NEC.
When I fill out the schedule c on turbo tax, it asks for a principal business code which I don't have because it is not my business.
Anne61
Use 999999. You are considered self-employed for that income on Form 1099-nec. You can answer NO to the did you have employees or send out 1099s questions. The income on Form 1099-NEC is considered self-employment, so you are setting up a Schedule C to report your income and expenses on. You should be answering those questions as you are considered to be owning your own business. Use your name and home address for the business form.
I need to enter a 1099 - Am I Self-Employed?
What self-employed expenses can I deduct?
But you do have your own business for it. Yes you are the owner of your own self employment business. You are in business for yourself. Use your own info. The people or company that pays you is your customer or client. You are considered to have your own business for it. YOU are the business.
You need to fill out schedule C for self employment business income and pay self employment tax in addition to regular income tax on it. The SE tax is to pay Social Security and Medicare tax that wasn't taken out like on a W2.
You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.
How to enter income from Self Employment
Schedule C line B Business Code is a 6 digit number for your activity. Here are the IRS instructions for Schedule C. Business codes start on page 18. If you can't find a code that applies, you can enter 999999.
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
See the FAQ on Business Codes,
https://ttlc.intuit.com/community/business/help/what-is-the-business-code-used-for/00/25672