“Owners Taxes Withheld” are not reported on the 1099. How do I report/claim the amount on my income tax return? Where does that money that is deducted from the gross amount go?
It depends. If royalty income, then gross and oil and gas expenses are reported on Schedule E. That would be for severance taxes deducted checks. If by owners taxes you mean state income taxes deducted, then it goes to Schedule A, along with other state income taxes. If you mean federal income taxes were withheld, then that is added to estimated taxes and other federal taxes paid or withheld. The state income taxes withheld and federal income taxes withheld should be on the 1099. Severance taxes and other costs charged against royalty income may or may not be itemized on 1099-Misc and you can calculate off the check detail. If you are a working interest owner, then you get different 1099 form as income goes to Schedule C. You should consult your CPA for the correct reporting based on the particular facts of your situation and to be sure you comply with both federal and state income tax return requirements.
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For those 1099s that do not report all of the taxes, it is useful to go to the final check stub statement of the year which “should” have the totals for the year summed up at the bottom. Remember, you should save all check stub statements for seven years for IRS purposes. Some little companies do not total everything up and I have had to look at all of the statements for the whole year and total the taxes up myself.
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