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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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Received an unexpected royalty on a country property

Customer Question

Received an unexpected royalty for oil on a country property we own, Is this money taxed like other income at the same rate etc?
Submitted: 7 months ago.
Category: Tax
Expert:  Lev replied 7 months ago.
Yes - royalty income is taxable.
Expert:  Lev replied 7 months ago.
Taxpayers who receive these payments are royalty owners who do not have a working interest in extraction operations. Taxpayers should normally report these payments as income on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Income reported on Schedule E is usually not subject to self-employment tax.Taxpayers who do have a working interest in the extraction operations are subject to self-employment tax, and must file Schedule C (Form 1040), Profit or Loss from Business.Let me know if you need any help with reporting.