FEES on Royalty Payments/Taxes

Texas Mineral Rights Montague County, TX
1

Specifically, I am referring to Fuse Energy. According to their own math, I am losing about 25% of my royalty payment to fees. I have called them and they say it's not taxes. And it doesn't look to me like I am losing this same 25% on checks from other companies. Or maybe it's just done in some other way that I don't actually see the loss.

I started thinking about this when I was doing my taxes. It looks to me like I am being taxed on money I never got. For example, if Fuse owes me 10K I have to pay taxes on 10K. That's the amount on the statement. BUT, the actual check I got from them was only 7K. Seems to me I should pay taxes on this lower amount.

How does this work? I am missing something! Thanks in advance for setting me straight!

2

Patty - I may have an answer to the taxes part. When I filled out my 1040, line 17 says to attach Schedule E. Supplemental Income and Loss. It basically takes your gross royalty income and deducts the taxes and other expenses (also listed as 'other deductions' on the 1099) so that you're paying taxes on the net.

Shari

3

Thanks for the reply Sharin! I may have overpaid my taxes!