Rent and royalties from the same out of state mineral rights.

[xeddog]

I am a California resident and own some mineral rights in Oklahoma.  Last year I received some royalties from a company that I had leased to prior.  The lease expired and I signed a lease agreement with another company, so now I have rents and royalties from the same property.  Both companies have sent me 1099-misc forms, and they show the correct "Royalties" or "Rents" on the forms.  I have entered the 1099 information for both into Turbo Tax Premier edition, and after doing a review, TTax is telling me:

Since these are both from the same property, should I ignore this and continue, or do I need to change something?

Second question, since this is all for Oklahoma, is the money received for the lease taxable in OK?   I have done a little reading and it seems like rents are for real property, and mineral rights are not real property.  The 1099-misc for the royalties had $28 OK state taxes withheld, and TTax is telling me my state refund is $28.  It is hard to imagine OK letting over $40K go un-noticed.

Thanks,

{Name removed}

[DianeW777]

No do not ignore it.  You must enter it once for rents received and again for royalties received.  

Yes you must file the Oklahoma (OK) return to report the income you received from property physically located in that state.  Be sure to enter the OK return first, and then your resident state last.

• OK Filing Requirements (page 4)

The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.  As the resident state all worldwide income must be included.

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state

If you don't have tax in one of the states, then there is not going to be a credit for that state. 

Review the link below if you have questions about a particular state.  

• How do I contact my State Department of Revenue?

States with no income tax - If you live in one of these states there is no credit available:

• Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming