I inherited a "very" small share in some gas wells this year. I was sent a 1099-MISC for the earnings. Box number 2 is filled out with the total amount of royalties of $1200. (No other box has any information filled out). The total of my checks were $1077. At the bottom of the 1099-MISC form the drilling company has printed the following: OWNER DEDUCTIONS $132 and INTEREST $9. I assume I use Schedule E but there is nowhere to report the interest? And do I report the Owner Deduction on line 19. OTHER?
Or am I completely wrong on how to do it? 🤔
Any help would be appreciated. Thanks!
Based on your information, you had $1,200 of royalty income, $132 of owner expenses, and $9 of interest income (1,200-132+9=1,077).
To enter in TurboTax, click the "magnifying glass Search" icon at top left and enter "royalties". When you hit return/enter, you should see a "Jump to royalties" link. Click that "Jump to royalties" and you will be at the starting point for entering royalty income. Follow the interview question to enter the $1,200 of royalty income reported to you on a 1099-MISC.
When you click Continue, you'll get a screen for your Depletion deduction. You are allowed a 15% ($180) deduction for depletion. Then, click "More Expenses" and you will see a screen to enter your $132 of "owner deductions" as "Management Fees" on the "Enter Common Expenses" page. Note the depletion deduction is also on that page.
The $9 of interest income can be added in the "Federal>Income & Expenses>Interest and Dividends section.
Thanks for your help David.
1. So you are saying that I am eligible for the 15% depletion even though I am just one of about 600 mineral rights owners and not an actual land owner?
2. Also the path that I am taken to for the $9 of interest has me filling out a Schedule B. I have nowhere near $1500 in interest to report, so do I really have to fill out that Schedule for $9, or can I just add it to my interest already reported on line 2b of my 1040?
thanks again!
Yes, the 15% depletion is allowed for any mineral royalties. You should be able to add the interest income under the 1099-INT without automatically creating the Schedule B.
It would appear the $9 Interest is INCLUDED in the $1700 that you pay taxes on after Dedus . If you add it on Sch B your paying taxes on the $9 twice (Big Deal). Glad to see deduction for 15% Depletion mentioned.