Paying Shale Taxes

Friday, Mar 27, 2009 @03:53pm CST

If you received Haynesville Shale money this year there are a few things you need to know before heading to the tax office. A local tax preparer says whether you received money from renting your land or money from royalties, paying taxes is a must.
"They want to know a specific amount," said LaVance Henderson. "Can you tell me? I received this check. Can you tell me the specific amount of taxes I need to pay cause I want to write a check and send it in. No, I can't tell you that specific amount."

Henderson says there is no set royalty tax. He says people who received a check should have also received a 1099 miscellaneous form from whomever you signed a lease with. He tells KTAL you'll need that form and the rest of your tax information when you file.

"This is based off your total income and therefore you pay taxes on your total income, including royalties."

Henderson tells KTAL there is a downside to making these payments. The biggest one is the lost of earned income credit. For example, a couple with two kids making $20,000 a year who has not received shale money could get a more than $6,000 return. However, if this same couple added at least $2,950 in royalties the earned income credit is denied and that return decreases to less than $2,000.

Henderson says make sure you check your 1099 for errors. The royalties or rent box should be filled in. If another box is marked you'll have to get a new 1099 and start the process over.

Buck