Ask Experts Questions for FREE Help !
Ask
    kayaks3's Avatar
    kayaks3 Posts: 1, Reputation: 1
    New Member
     
    #1

    Mar 25, 2007, 11:34 AM
    1099 misc
    I have nonemployee compensation reported on 1099 misc form (box 7)from oil and mineral rights. I am retired and have never been to the site of this oil well. Do I have to report that income on Sch. C and pay social security and medicare taxes on it as well?
    Thank you for your answer.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #2

    Mar 29, 2007, 10:43 AM
    Contact the issuer of the Form 1099-MISC. The income should be reported in Box #3 (Other Income).

    Have the issuer issue a corrected Form 1099-MISC, then you can report the income on Line #21 (Other Income) of Form 1040 and avoid paying self-employment taxes on this unearnmed income.
    Mobea's Avatar
    Mobea Posts: 220, Reputation: 15
    Full Member
     
    #3

    Mar 31, 2007, 09:41 PM
    Actually, the income on the 1099-Misc should be corrected to read 1099-Misc ROYALTIES INCOME.
    This is reported on Schedule E (Rental/Royalty Income) which is passive income. This is income that you received because you purchased at some point or other, mineral rights somewhere. It kind of like investing in an oil well somewhere and someone else is doing the drilling. That's why it is "Passive Income". You don't have to do anything. You just invested to the rights of the well, not the oil it produces. Also on the schedule E under the expense line "DEPLETION" take 15% of whatever the amount that the 1099 was issued for and deduct that because every year, they use up a little more of your "well". You do not pay social security or medicare on passive income and your losses are not limited by income.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #4

    Apr 5, 2007, 12:35 PM
    Agreed!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #5

    Apr 5, 2007, 12:45 PM
    Agreed!

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

1099 Misc [ 3 Answers ]

Is the small stipend that a homeowners association pays the treasurer and secretary required to be reported on a 1099 for income tax purposes?

1099-misc [ 6 Answers ]

Does an individual, not a trade or business, need to file a 1099-misc to another individual ? I can provide specifics if necessary.

1099-MISC and w2 [ 1 Answers ]

Hi, Me and my wife both were on H1 last year. I had 2 W2s last year, and my wife was working as a contractor for the first 3 months last year and then she was on a W2 for the rest of the year. She got a 1099-MISC from the contractor for the first three months of last year. Could you tell me...

1099-misc [ 1 Answers ]

I filed my taxes and shortly thereafter realized that my 1099-MISC income for contract work was incorrectly reported under box 4 (Federal Income Tax Witheld). So, instead of my 1099-MISC showing nonemployee income, it showed that total as being Federal Income Tax Withheld. Do I just let this go...

1099-misc for h-1 [ 1 Answers ]

Hi, Can a person on H-1B working for only one employer receive 1099-MISC instead of W-2 from that employer? Thanks.


View more questions Search