I reside in California, I received royalties from mineral rights I owe in Texas. For those who also reside outside of Texas, do you pay state taxes on your texas royalties?
Texas does not have a state income tax, however, in addition to the severance taxes taken out of every check, you will receive a county/school/city/MUD property tax statement at the end of the year.
Thanks, Buddy. I did pay the severance taxes and county taxes in Texas, but now it look like California wants their cut. Wasn't sure if this was normal
Now I understand your question. I am sure CA wants their cut, even though the money was earned on properties outside the state. I have to file, for example, income tax in Louisiana and Colorado State Income Tax, even though I live in Texas. Pity.
Best check with your CPA.
This is a good question, so thanks. I'd be curious to find out if California taxes your Texas income. As with Buddy, my royalties are from out-of-state, being Oklahoma. Since I pay Oklahoma withholding and file there, I get an "Other State" tax credit - and am not double-taxed. Since Texas doesn't have a state income tax, California may, indeed, tax the income. This state just keeps giving us more reasons to leave, doesn't it?
I live in New York State, and we pay a small amount of money on property taxes that are itemized on the federal income tax form only. Good luck.
Oklahoma withholds 28% of all royalties checks that go to people out of state. When you file your Federal tax, that sets the tax rate for your Oklahoma state income tax. So, lets say, you are in the 35% income rate, you will pay max. OK tax rate. Even if you only made $1000 in Oklahoma you would pay 7% of it to the state. I live in TX and we do not have state income tax, but we pay bigger property tax.
I live in California and receive mineral royalties from eastern MT. Since the CA tax return uses most of the same info as on the Federal form, I get taxed twice -- once from MT and once from CA. However, I also get the "Other State" tax credit on my CA return because of the double-taxable income.
Thanks, Christine. I guess I should count my blessings that my royalties are in Texas
I am kind of late in this discussion, because I just joined looking for answers to this very question, so I hope someone out there is still looking and sees my post. I live in Idaho. I knew nothing about all this stuff when about 3 years ago I found I had inherited mineral rights and started receiving Royalties. The company producing is based in Oklahoma, but the property and mineral rights are in Texas. My accountant who is, like me, here in Idaho, has been doing Oklahoma State income taxes for me from the beginning but today he gets this feeling that maybe I should have been paying them in Texas? What I found on the internet looked like Texas has no state income tax, so I think not. Then he wonders if I really was supposed to be paying them in Oklahoma all this time? Can anyone tell me for certain where I am supposed to pay state income taxes? Taxes are due soon, so I hope someone out there has an answer to my question. I would really appreciate your help. Thanks so much.
Mary,
Texas does not have a state income tax. I do not understand why you would be paying tax to Oklahoma who does have a state income tax since the property is in Texas. Has the company been withholding funds for taxes? If so, you would have to filed an Oklahoma state tax in order to get the amount back that they are with holding. Oklahoma usually with holds about 28% if you have production in their state and you live out of state. But, since your property is in TX, they should not be with holding anything.
Thanks Virginia,
No, they are not withholding either State or Federal Taxes, just production taxes, etc. The drilling company sends me a 1099, so I figured since I got paid from Oklahoma, they sent me a 1099 and they were from OK, I should be paying OK State Tax. My accountant, who is basically family with Idaho and who, although he is a CPA, is just starting so doesn't know all the ins and outs of everything in every state really didn't know, so he did it. Yesterday, he was looking at the 1099 and did not see on it where they had reported it to any state, but since I have been paying property taxes to Texas, he began to get worried that maybe I should have been paying to Texas where the property is and maybe not to OK. Asked if I knew and of course I know less than him, so no.
Anyway, no, they are not withholding for OK or Fed. So, you only have to pay State income taxes in the state you live in and the State where the property your income comes from, if those states have State income taxes, and not in a state from where you are paid, is that correct?
I actually should have thought of this before, because the company I work virtually for is on the East Coast somewhere, and I am on the West Coast, and before (and aside from) this gas Royalty stuff, I never have paid State Income tax in any state besides the one I live in, since I never set foot outside my house for work. I get money from that company in whatever state they are in and don't pay taxes there, so it really doesn't seem logical that I would have to pay OK, since I don't live there or work there. I guess I just thought I should be paying someone.
Thanks, again, Virginia.
Mary,
If you want to pay someone, I can use it right now. My son has been in ICU for over 24 days hooked up to everything, so you know what that may be, we are praying that he will get well. Please pray for him.
Anyway, regarding taxes:
Be sure you take the production and depletion taxes off your Fed. income tax. I think Depletion tax goes on line 18 on Schedule E and production tax is on 19 off of form Schedule of Mineral Interest. Your CPA should know for sure. I don't have my tax to look at right now, but that is the best I can remember.
Since the mineral interest is in TX, you only pay Federal Income tax. That is one reason Texas land tax is high, everything is figured into it. But, still a great state to live in.
Where the company main office is doesn't matter as far as I know, there maybe some except like CA to that rule. But, I'm sure about OK & TX. I think KS has some kind of regristation fee on mineral every few years, not sure how that works nowadays as I no longer have property there.
Thanks again for your, Virginia.
I definitely will be praying for your son.
Regarding the taxes, I looked at OK Tax commission online and it only said if the property was in OK, so I talked to accountant. We agreed finally, after a couple phone calls, to leave OK's past in the past and chalk it up to learning the hard way, because, if we file amended and get the money back, I will only have to pay it to Idaho, since ID gives the break for paying in multiple states. What I had to pay OK, I did not have to pay ID, but would if I got it back. For this year, he is going to file with OK to get back the Qtr Est I already paid and not file there in the future. I think that is the best thing to do.
Yes, he has been taking the Depletion and production taxes I think. I will email him just to be sure, rather than another phone call. Hopefully he has not finished and sent them yet, through he was working on them several hours ago.
I am sure TX is a great state to live in. My adoptive father and his family were from there and the reason I have this small portion of mineral rights. My brother's wife actually has 3/4 and I only 1/4, but I appreciate all that he and his homeland have done for me.
I will, as I said, continue to pray for your son, and check back here with you from time to time to find out how things are going.
May God bless you and your family. mm
I live in California and I received a lump sum amount for leasing my mineral rights to a company in Oklahoma. I had to pay Oklahoma tax and Federal tax but I did not have to pay California tax. What difference does it make if it's money from a lease or money from royalties? Maybe you didn't do your taxes correctly.
Robert,
Oklahoma has state income tax, so it doesn't matter where you live, you will pay tax on any money you made in Oklahoma. Since this was bonus money, it will be taxes in Oklahoma. If it's a check from an oil & gas producting well, the oil company will take 28% out of your check before you will receive it. Then if you don't owe a lot to Oklahoma you will have to file an out of state Oklahoma tax in order to get anything back. You also may be penalties if you didn't file est. tax. They love penalties.
But, that isn't all that OK does. If you make $100. in Oklahoma and you are in the 31% tax bracket on your Federal tax, you pay max tax in OK about 5 1/2 % +. Also, you get a few other write off like Depletion tax if a well is producing. I pay more taxes to Oklahoma than lots of people who live there. That is one reason I haven't moved to the farm, plus there is just to much work to be done and you can't hire good help.
Hi Virginia,
All I know is that the company sent me a letter stating they would pay me $350.00 per mineral acre and I agreed and leased them 40 acres. They sent me a check for $14,000.00. When I filed my taxes for that year I paid the IRS and for Oklahoma a very small amount. I did not pay California anything for the money I got for leasing my mineral rights. I even called the California Franchise Tax Board and they confirmed that I do not pay taxes for money I got from Oklahoma.
Maybe that $350.00 was pre-calculated and it is the amount after 28% was deducted; I don't know.
Thanks for your reply
Robert,
I must of wrote this wrong. Since you only received a lease bonus, you would only owe state income tax in Oklahoma as that is were the money came from. If you paid $350 in taxes, you were lucky as that is only 2.5% and that is the middle of the tax bracket. You don't owe Estimate taxes as it was a one time payment for a lease bonus.
IF they drill a well and you start getting money from the oil & gas, that is when the 28% deduction from the oil/gas check comes in, then you will probably need to pay est. tax.
Virginia,
I didn't pay $350.00 in taxes. I got $350.00 per acre x 40 acres = $14,000.00. My tax to Oklahoma was like around a few dollars.
Hello,
I am a mineral rights owner only (not surface) for land in Texas leased by a company based in OK. I have only paid federal and state income tax for the state I resided in for the tax year. I never paid any state tax to OK or TX. I signed the lease when I lived in FL and now live in VA. Here is what I have currently done for taxes:
- Received lease signing bonus payment when I lived in FL. Received 1099 and payed federal income taxes only since no state income tax in FL
- Received shut-in payment when I lived in FL, Received 1099 and payed federal income taxes only since no state income tax in FL
- Received shut-in payment living in VA, Received 1099 and payed federal income taxes AND paid state income tax to VA
- Received production royalties living in VA, Received 1099 and payed federal income taxes AND paid state income tax to VA
I recently became aware of an additional property tax but I have not received any "property tax" documents. Does the "property tax" only apply to years where you are receiving production royalties? Also does it apply if I am NOT a surface rights owner?
Based on what I have read, I think I may have done my taxes incorrectly, perhaps owing some tax to OK?
Please advise.
Thanks in advance. Jay