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Writing Forum | WritersDigest.com • Royalties do not count as taxable income. : Tips and Advice • Writing Forum | WritersDigest.com
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Re: Royalties do not count as taxable income.

PostPosted: Thu Mar 30, 2017 9:44 pm
by Brien Sz
What's your point? You want royalties to count as taxable income... Because currently if you are filing a tax form, generating income and not paying taxes with your royalties, then it is a taxable income. It will always be a taxable income. Instead, one should concentrate on what you can claim in your taxes because of what you did to get to the point of receiving royalties.

Re: Royalties do not count as taxable income.

PostPosted: Thu Mar 30, 2017 9:50 pm
by robjvargas
I'm not sure what you're trying to change.

Royalties ARE taxable. What sort of taxation depends on how you came to them. I'm not an accountant, so I don't want to get too deep into those waters.

You DO have to file for and pay taxes on royalties, though.

And I don't see that ever changing.

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 4:26 am
by Brien Sz
If so, Why would I want to pay any taxes if I didn't have to?

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 6:30 am
by robjvargas
It's quote an odyssey, I know, but you might want to look up and call the IRS' customer support number. It's going to be ultra busy this time of year, but that should get you what they need.

The rep would probably give a sigh of relieve to not argue something, and just explain it. :)

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 10:24 am
by williamadams

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 10:37 am
by williamadams

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 10:38 am
by williamadams

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 10:41 am
by pls
In years previous to 2016, all of my meagre royalties were taxable, as listed on 1099's. However, Amazon didn't bother to send me a 1099 for 2016. Maybe they're trying to tell me something?

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 10:49 am
by williamadams
the IRS says:
Royalties
Royalties from copyrights, patents, and oil, gas and mineral properties are taxable as ordinary income.
You generally report royalties in Part I of Schedule E (Form 1040), Supplemental Income and Loss. However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ.
For additional information, refer to Publication 525, Taxable and Nontaxable Income.


Forbes said:
The source of royalty income can run the gamut from copyrights to patents to oil, gas and mineral properties. From a tax standpoint, royalties are generally reported to you on a form 1099-MISC at box 2 and are taxable as ordinary income. Interestingly, however, there's no one size Schedule fits all for royalties.

Another tax advisor said
Amounts received by individuals who create intellectual property may be royalties or compensation, depending on whether they own and license the property or create it for an employer. Royalties may be either business or nonbusiness income.

Individuals in the trade or business of creating intellectual property may deduct ordinary and necessary business costs, and some are exempt from the uniform capitalization rules for the property. [ but not taxes - ed]

Whether a transfer of intellectual property is a sale or a license of the property depends on whether all rights to the property have been transferred. A transfer treated as a sale generally gives rise to a capital gain or loss, and as a license to ordinary income. [but these are not royalties even though there is a capital loss- ed]

The terms of a bequest or gift of intellectual property likewise control whether all substantial property rights have been transferred. This determines how the bequest or gift is treated for tax purposes. [but this is taxes on the gift not the taxes on royalties - ed]

- See more at: http://www.thetaxadviser.com/issues/201 ... B0bGd.dpuf

Re: Royalties do not count as taxable income.

PostPosted: Fri Mar 31, 2017 11:21 am
by williamadams
Royalty Income

....., the proper tax treatment for royalty income is determined by when the creative activity resulting in the royalty occurred.

The IRS has ruled that an individual who writes only one book as a sideline and never revises it is not regularly engaged in an occupation or profession, and the book royalties are not considered earnings from self-employment.

[But they are still taxable just as regular income not a business -ed]

... preparing new editions of the book and writing other books and materials reflect the conduct of a trade or business. Thus, a full-time professor who co-authors a textbook and does not engage in any other commercial authorship work while writing the textbook and has no obligation to work on future editions is not engaged in a trade or business.

...Even though an individual is retired and not currently involved in his or her creative pursuit of income, any royalties received are business income if the individual was engaged in the business at the time the material generating the royalties was produced.


... In summary, royalty income should be classified as business income for individuals who were in the business at the time the intellectual property was created.

[otherwise they are personal income but still taxable - ed]