If the 1099-misc companies send out are going to reflect the Gross Royalty paid amount, why do they not have to reflect the Deductions and Taxes taken out of those payments? Whats the easiest way to calculate those totals?
Look at the sales and expenses reported on each royalty check detail. Set up a spreadsheet with columns for check date, gross royalties, severance taxes, deducts for each payor. Best to use separate page for each payor. Compare totals to the 1099. Then you can do this monthly for 2023.
Regarding the 1099-Misc. Mine shows a column called “Prod./Tax” with an amount, but this is not listed in a line # for the 1099. So the Gross in Box 2 does not match the actual checks I received.
Does anyone know if this is not deductible? Do I report on the Gross only? Thank you.
You report royalties on Schedule E. Gross royalties, before deduction of severance taxes and other costs, is reported on 1099 and depletion is calculated from gross. Some companies list deductions charged on 1099 and others do not. The checks you received are gross royalties less severance taxes and other charges. Those costs are deductible on Schedule E. You can also deduct property taxes you paid and certain other costs you incurred with respect to the royalties. Discuss with your CPA .
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