Taxes on mineral rights royalties

Does WVa require to pay income tax on royalties paid. When you live in a different State. What type of tax needs to be paid. Thanks

Linda,

Yes, you are required to file a WV Income Tax Return for royalties paid to you. You should receive an IRS 1099 from the production company and it will be necessary to file a WV return, in addition to federal and state taxes, assuming you reside in a state that has an income tax.

In addition, depending on your tax / income situation, you may need to start paying Quarterly taxes to WV in the future. I am not a tax accountant, just going on my personal experience.

WJ

Ditto what Wilson wrote. In my home state, North Carolina, you pay state income tax on all earnings, but if you pay state income tax to another state, like WV, you get "credit" for that amount and are taxed on the difference between WV tax rate and NC rate (NC is higher, so I pay NC a little tax on my WV earnings. Other states might be different. Turbo Tax can deal with it for you. I expect other programs can, as well as a good tax accountant.

I am not a tax accountant! but have paid WV taxes for awhile.

Thank you all for this info

Happy to help. Most production companies are reliable in providing a 1099 by February 1st as required, but some are not and the State f WV has beneficial information on their website too.

WJ

I have one company that always withholds WV taxes and sends to the state, and sends me the form for that. Not required in WV. The 1099 will reflect the full amount including the amount withheld, and this will not match the royalty payment checks. Be aware.

Thanks. I am really surprised how much the taxesj are in Florida we do not have a State income tax.

Nancy

I think, unfortunately, I know the answer to this, but thought I would ask. For the WV tax, we also have to include bonus money as well as royalties?

Jim,

You are correct, that is reportable / taxable income. In addition, be aware of which 1099 any 'bonus' money is reported on, there are different consequences based on how it is reported.

WJ

My understanding is that the bonus is a type of rental and not royalty so no depletion allowed on bonus. Good point Wilson about seeing what the 1099 says.