Out of state tax question

Oklahoma Mineral Rights Blaine County, OK
1

I live in California and hold rights in Blaine County. My wife and I signed a lease and received a lease bonus last summer. As this is the first year that we have had to deal with this we do not know where the tax liabilities lie. Do we have to claim and pay taxes on a Lease bonus in both states? I know the question is late, so any insight would be greatly appreciated.

Thanks, Tim

2

For years we would get tax info from the oil company (Conoco at the time), and you have to report it on your Federal and state return (we are also in CA), and you report the tax paid. Since we are CA residents I'd also file in OK to get the taxes refunded. In our case I finally game up on filing in OK since the tax refund was not worth the trouble. If the OK withholding is worth it then you should probably file in OK. It's not a big deal as you file as non-resident.

3

I live in texas but It becomes income and inturn will effect your tax bracket and percentage which you pay, not pretty if you got a nice bonus and have to give a chunk to the IRS.

4

I haven't received any royalties yet, just the lease bonus. No taxes were paid up front, so I'm just trying to figure out if I need to file non resident in OK to pay taxes there. TurboTax asked me if I needed to file in another state rather than telling me if I should and I was confused. So, I guess the question is then, is there tax liability in OK for a lease award as opposed to a royalty?

5

Yeah, I have already seen that from a federal standpoint...

6

If you use TurboTax you'll have to pay for the OK forms. I'd suggest that you just download the Oklahoma non-resident form from their website, the form is very simple, go through it, do the math based on the forms that you got from the oil company (probably a 1099-MISC or similar form), or whomever paid you the bonus. If no taxes were deducted then go ahead and fill in the OK tax form (511 NR) to see if you have to pay them any tax. Ours was withheld by the oil company so we never had to pay or file unless we wanted to get a tax refund. Hope that helps, here is the OK tax website www.ok.gov/tax/Forms_&_Publications/Forms/Income

7

Thanks John!

8

Make certain that everyone paying you has a W-9 which they will request. The operator or other paying company will request a W-9 when they send you a division order.

9

Thanks Stephen. The leasing company has that information but we haven't received anything from an operator since I do not believe that there is anything solid in the works yet.