How much will you owe in taxes if you made 10888.00 last year in mineral rights royalties and worked and no taxes were taken out of your paychecks and you live in Fort Worth Texas?

Answer 1

Mineral rights royalties are paid to you by a person/company in exchange for a lease for mineral extraction. Mineral rights royalties are reported on Schedule E (Supplemental Income and Loss). Since the amount of your wages wasn't included, taxes are figured only on the mineral rights royalties.

The royalty amount of $10,888 is reduced by $5,450 standard deduction for 2008 ($2,700 for 2009) and $3,500 personal exemption for 2008 ($3,650 for 2009). The result is $1,938 taxable income for 2008 ($1,538 for 2009). The tax is $194 for 2008 ($154 for 2009).

The tax will be reduced if your royalty income is reduced by any expenses, such as depletion.

But the tax also will be increased by the increase in your taxable income with the addition of your wages. If no income taxes were withheld and you were issued a Form 1099-MISC (Miscellaneous Income), then you're considered self-employed. You'd file Schedule C (Profit or Loss from Business) or Schedule C-EZ (Net Profit from Business). That income would then be reduced by expenses (advertising, business mileage, etc.).

For more information, go to www.irs.gov/formspubs for Publication 535 (Business Expenses). Also go to www.mineralweb.com for articles on mineral rights royalties, depletion allowance, etc.