Just got a DO from Devon. I have 5.33 acres and this is a 2 section well. I am leased for 3/16. The split for my section according to them is .5067. They say my decimal interest is .00079172. Is that correct? Also, they sent me a w-9 form. How do I fill that out or do I even need to? Thanks Marc
Here is the equation. net acres/spaced acres x royalty x % perforations in your section. 5.33/640 x .1875 x .5067 =0.00079122 which is pretty close, so okay to sign. Since you didn’t give your section, I assumed 640 acres. Not all are 640. You do not have to fill the DO out to get the royalties in OK. However, they do need the W-9 in order to pay you and not take out the taxes as well. I always do sign them and send back certified return receipt because I want a record to match against my checks. Decades down the road, I have found the old ones my parent’s signed very helpful in correcting new operators mistakes.
Ok, I am in 16-16-11. On the w-9 do I indicate somewhere how much I want taken out for taxes? I don’t see a place on there to say how much % to take out.
Thanks again for the help
I just sign the W-9 and send it in. They will take out the OK taxes usually. If you sign the W-9, they don’t usually take out the federal. If you don’t sign the DO, they will take out about 28%. It usually says what the amount is at the bottom of the DO in tiny print.
Thanks again. Hopefully will see a check soon.
Hey Marc that looks really close based on your ownership. I would send in the W9 with your ss# or the tax I’d # if you have a trust, partnership etc. if you don’t send a W9 they can delay payment. Cheers to you and blessings.
No just send it in. It’s income. They won’t dilly dally with your withholding. Good luck and enjoy.
They take out Oklahoma state income tax for out of state residents only. The rate for this is 5%. Oklahoma residents are exempt from this.
If you do not submit an TIN (EIN or SSN) they are required to withhold 24% by IRS regulations. This previously was 28% but dropped in 2018 to 24%. This is called “backup withholding” Be prepared to file an Oklahoma state income tax. It is required if you make more that $1000. You may be subject to California state income taxes. I’d suggest putting 30-50% back to cover taxes, CPA, or attorney fees until after you have settled up taxes on the following year. If you see you are going to make in excess of $10-$15K in the year, I would ask your accountant about submitting quarterly tax payment.
Thanks for this info. Do you know if this will be considered as ordinary income?
Yes, it is.
M Barnes is correct, don’t worry about the deductions. In OK they have a set amount they take out for state taxes, since we are out of state we just file non-resident and OK Tax Commission sends us a refund of the state taxes. They don’t take out Federal. If you make a bunch of money you might have to pay the IRS something come tax time depending on what bracket you’re in, we’re retired so pay almost nothing. FYI - OK Tax refunds are darned slow! LOL
Yes, they will likely not send you a royalty check until you’ve sent them the W-9. In our case Alta Mesa let me email it to them.