How do I enter a 1099-NEC for a Royalty on Schedule E?

[dk1111]

How do I enter a 1099-NEC for a Royalty on Schedule E?  It used to be 1099-MISC last year and it doesn't seem to have a way to pull in the 1099-NEC I entered earlier in the income section.  TurboTax only seems to allow 1099-MISC.

[mesquitebean]

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@ dk1111  wrote:

How do I enter a 1099-NEC for a Royalty on Schedule E?  It used to be 1099-MISC last year and it doesn't seem to have a way to pull in the 1099-NEC I entered earlier in the income section.  TurboTax only seems to allow 1099-MISC.

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I'm a fellow user, not a tax expert, but I'll ask a couple of questions in the interest of time.   Most of the tax experts aren't around at night.  But this may save some time for them to have the following info at hand.  So keep watching this thread during the day, and hopefully someone will provide additional info based on the additional info you provide.

First, are you using Online TurboTax or desktop software (CD/download)?

You said your royalty was reported on a Form 1099-NEC.    What kind of royalty are you referring to? 

For example, is it investment income on extracted natural resources, such as royalty payments for oil/gas production on property you lease to an oil/gas company?   That type of royalty payment is normally reported to you on a 1099-MISC and then goes on Schedule E.   

Or is it a royalty payment from intellectual property that you did not create yourself?

Or is it a royalty payment from your business, such as intellectual property you created--invention, art, book, etc.?  That type of royalty is normally on Schedule C.

Or do you have an oil/gas or other natural resources business that has royalty income?

[dk1111]

Thanks for your reply. This is passive income for royalties on intellectual property.  It is not business income.

[mesquitebean]

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@ dk1111 wrote:

Thanks for your reply. This is passive income for royalties on intellectual property.  It is not business income.

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A 1099-NEC is generally not for passive income.   How to report intellectual property royalties depends on whether you created the intellectual property or whether it was created by someone else.   As I mentioned previously, I'm not a tax expert, so I can't advise you, but will see if I can get a tax expert to join the thread, and guide you further since your income was reported on a 1099-NEC.

@ DavidD66  or @ DanielV01   I see you are currently in the forum.  Are you able to please help this user who received intellectual property royalty on a 1099-NEC?    Thanks!

[DavidD66 · Accepted solution]

My suggestion, since it is Royalty Income that should have been reported on Form 1099-MISC in Box 2, Royalties, is to enter the amount reported on the 1099-NEC as if it was reported on Form 1099-MISC.  The way TurboTax takes specific form (Form 1099-NEC) entries and flows them to the tax return (Schedule E) the only way (in the Online program) to get the royalty income on Schedule E is to enter the amount as if it were reported on a 1099-MISC.  

Entering the income reported on a 1099-MISC instead if a 1099-NEC could end up generating a letter from the IRS because the Non-employee compensation wasn't reported on Schedule C.  It's an easy explanation:  The royalty income reported on Schedule E was incorrectly reported on Form 1099-NEC.  It was properly reported on the tax return on Schedule E. 

[vicbryan]

Thank you. The royalties are advance royalties from mineral resources. The issuing party sent me a 1099NEC( never sent before) as if I am a self employed business, which I am not. Just a retired 83 year coot who handles his own stuff.

[vicbryan]

THANKS!