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Level 1
posted Feb 1, 2021 12:29:23 PM

Taxes must be paid for roya Gas wells on my property.

On my property in some distance there are gas wells. I receive the royalties on  some. The royalties amount to $243.25 which means I must pay the taxes on this amount. I hope this will be easier to understand.

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3 Replies
Level 1
Feb 1, 2021 12:41:02 PM

I am a bit confused. Is it agreed that I must pay my taxes on royalties. I have paid for them for a number of years. At this point I cannot be sure where to go. Please send me an answer if you can.

 

 

Expert Alumni
Feb 1, 2021 12:46:25 PM

Yes, you should be able to open the section for royalty income and after you enter the income for each one, you should be able to enter the expenses paid on it in the same section.

 

This information will end up showing on your return on Sch E page 2.

Expert Alumni
Feb 1, 2021 2:05:08 PM

The 1099-MISC for Oil and Gas Royalty income is entered under the "Rental Properties and Royalties" section of the  "Business Income and Expenses" tab of TurboTax Self-Employed (online) or TurboTax Home and Business (Desktop CD/Download). You will also be able to enter any expenses related to this income; these usually come from a statement included with the 1099-MISC

 

(If you enter it under the "Income from 1099-MISC" interview of the "Other Common Income" section, it will ask if this is investment income from property you own. When you answer "Yes", the information will flow to Schedule E and you will have to go to the "Rental Properties and Royalties" section of the  "Business Income and Expenses" tab to make the expense entries.)

 

  • In the first interview screen that asks for information on the 1099-MISC ("Is this a Rental Property or Royalty?"), you must check  "Royalty property or payment". 
  • You will enter expenses (if any) from the payer's statement  later in the Royalty Income and Expenses interview. 
  • On the "Enter Your Depletion" screen, the program will calculate what your depletion expense can be. Unless you have chosen another method in the past, you can leave that number as it is. On that screen, select the "More Expenses" box at the bottom right. 
  • The next screen asks if you paid anyone more than $600 or more for work related to this property (uncommon).
  • If you answer "No" and "select "Continue", you will have have a screen asking you how to enter your expenses (i.e. what the payer showed as expenses on the statement).
  • Select "Enter my royalty info myself" and then "Continue" to complete the interview.