I inherited mineral rights a few years back when my father passed away. This past year, 2015, I received a bonus payment for a company to start drilling. I also received a royalty check for another site that we had not known about.
We live in NC, but are filing Oklahoma tax for the bonus payment. When we put in the amount for both payments (the royalty already had money withheld) H&R Block online is totaling our taxable income for about $1000 more than what we received. Does this make sense?
We are following the directions to claim one as rent and the other as royalties.
Kris, doesn't make sense to me but not knowing all the details it's hard to say. There are several deducts you can take on your schedule SE including gross production tax and depletion. Did you do your federal return first? You need those numbers to complete your OK return.
Hi Kris - I don't think that assumption is correct. I am not a tax attorney. I use Turbo Tax for my own taxes.
I don't know why it would direct you to split these payments this way.
You have two "properties". You are correct on how these payments get applied (rent and mineral royalties appear similar in my return).
I will also tell you that I have had years where I wanted to rip my hair out over how to "Account" for this royalty income. Seemed like I was putting square pegs into round holes with every well :).
Check the forms and make sure that your payments, the bonus and the royalties, did not somehow get counted twice. This happened to me - I made some kind of error and ended up with the 1099 $ showing up in two places and getting counted twice.
Good luck!