Reporting Royalties In Your Federal Income Tax Schedule

Reporting royalties on your federal income tax schedule is that the same as for any other type of income earned. Royalties are any income earned as part of arrangement for any artistic work, performance, demonstration or other contractual display of work owned by you.

2 Types of Royalty Income

Royalty income can come in 2 forms for tax reporting purposes. The royalties received that result from your creative work is considered self-employment income. There are also royalties received through an investment in a mineral operation, such as a gas and oil limited partnership.

Where to Report Royalty Income

Royalties derived from creative works are reported on Schedule C of the Form 1040. Any royalties derived from investment activities in mineral interests are to be reported on Schedule E of Form 1040. These forms may be obtained simply from the IRS via their website at IRS.gov (with an instruction booklet). They can also be accessed via a software program or through the employment of a professional tax preparer or adviser.

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