I had still been attempting to write until this year but I haven't published anything. I still receive meager royalties from a book written 15 years ago. Do I report my royalties on schedule E since I no longer write?
I have found conflicting answers on Turbo Tax support. I have attached the one that seems appropriate for my situation But I have also read posts that state that all royalties for having written a book in the past should be reported on schedule C.
Thank you in advance for your help!
Yes. If the Income from 1099-MISC is reflected in Box 2 it will be reported on Schedule E with your Tax Return. Per the IRS: Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income.
Please follow the directions below to enter your royalty income:
The IRS makes a critical distinction between authors and hobbyists. Authors are trying to make a living selling their writing. You are deemed to be a professional if you are trying to make a profit in the last 2 of 5 years. So the intent to make a profit is important. In your scenario since you had never published, you would be considered a hobby income.
If you are in the business of being an author:
Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income.
In most cases, you report royalties in Part I of Schedule E (Form 1040).
However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). This can be done using TT Self Employed.
If it is a hobby where you don't intend to make a living then you report the income as hobby income.
If you don't have any other itemized deductions, TurboTax will deduct the greater of the standard deduction or itemized deductions. TurboTax will choose the one that lowers your overall tax liability.