Is there any way to avoid this tax legitimately? Receiving royalties from the Cana - I am a Texas resident. Get hit with a 5% tax since I do not reside in Oklahoma, where my mineral interests are.
Anybody else discover a way to legally get around this tax? Doesn't seem fair that other royalty owners don't get taxed simply because they live in OK.
Oklahoma residents pay 5.5% income tax on the same. You are getting off light! ; )
That certainly puts things in perspective!
Rick Howell said:
Oklahoma residents pay 5.5% income tax on the same. You are getting off light! ; )
Oklahoma residents are required to declare royalty income on the state income tax forms, and that is where we get hit with the 5.5% tax. So there is no legal escape.
However, my understanding is that the 5% is actually "withholding" for non-residents, and that you are technically supposed to file an Oklahoma state income tax form as an out-of-state resident. I believe they instituted the "withholding" because it was so hard to enforce. So even if you don't file, Oklahoma still gets their money. (Correct me if I'm wrong.)
If you file a OK state income tax form at the end of he year you may most of it back, unless you have a lot income in OK.
I know some little churches around here that can use a nice donation~I mean, if you are going to have to pay it in in income taxes anyway it would be better than the Feds getting it all. And who know you might just get an extra blessing out of it! That's what we plan to do with at least a tenth of our good little well "The Branch" in Section 16 2n,4w Stephens County.
A income tax problem is a good problem to have if you ask me!!
File out of State, non-resident, state tax form. I used tax software & received just over 2/3rds back. Make sure you are using NON-RESIDENT TAX FORM. Had money back in 2-3 weeks.
I file a Form 511 Non Resident tax return every year. Only fair (and legal) thing to do. Interestingly, I have to attach my federal return as well. (I live in Texas, glorious state, but Oklahoma would be right up there in my list of places to live. As would the Puget Sound area, if the politics ever get straightened out.)
Linda: God bless you.