Question

1099-Misc for Oil royalites, do production taxes belong in box 16?

Forum|Forum|3 years ago
March 3, 2023
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1099-Misc for Oil royalites, do production taxes belong in box 16? This year Turbotax (TT) imported the state withholding tax AND the production taxes into box 16. I don't think that is right. Any advice from an expert?

TurboTax Home & Biz Windows

D

DianeW777

No. Only state tax withheld should be included in Box 16 from your 1099-MISC. The production taxes should be included in your tax return as an expense on your Schedule E even if you do not actually operate the extraction of the oil.

You may be entitled to the 15% depletion rate. Depletion rates are set by the IRS for various natural resources. The most common rates are listed as follows: Oil and gas, 15% percent.

For example, if you have $1,000 in oil royalties, the depletion allowance is 1,000 x .15 (15%) or $150. You would enter that amount in the box if TurboTax does not calculate it for you.

[Edited: 03/06/2023 | 12:22p PST]

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