We receive a small royalty each year from an oil property, it is divided by family members, It shows state tax withheld other taxes and a net. How do I enter this info? Thank you

grace17- — Tue, 04 Jun 2019 00:51:06 GMT

There are two different ways that royalties can be report...

AndreaG — Tue, 04 Jun 2019 00:51:08 GMT

There are two different ways that royalties can be reported in box 2 of Form 1099.

Some payers report the gross amount of royalties in box 2; which means that the amount of the tax is included in box 2.

Some payers report the net amount of royalties, which means they have subtracted out the production taxes.

You would report the gross amount of royalty income on Schedule E. Then you can take a deduction for the production taxes that you paid. Please refer to page 6 of the IRS instructions under the heading, "line 4" for additional clarification. https://www.irs.gov/pub/irs-pdf/i1040se.pdf

According to page 16 of Pub 525 under the heading, "Royalties", "in most cases you report royalties on Schedule E (Form 1040). However if you hold an operating oil, gas, or mineral interest....report your income and expenses on schedule C (Form 1040)". https://www.irs.gov/pub/irs-pdf/p525.pdf

Please refer to the following FAQ for instructions on how to enter this information in to Turbo Tax. https://ttlc.intuit.com/replies/4792182

topic We receive a small royalty each year from an oil property, it is divided by family members, It shows state tax withheld other taxes and a net. How do I enter this info? Thank you in Investors & landlords

We receive a small royalty each year from an oil property, it is divided by family members, It shows state tax withheld other taxes and a net. How do I enter this info? Thank you

There are two different ways that royalties can be report...