royalty income by musician, author

[Greta]

Royalties received by a no longer active musician. I've been putting them on Sch C and paying social security taxes. Is that correct? City Hall wants a business license.

A widow continues to receive author husband's royalties. I've put these on Sch 1 as other income, no social security tax. Correct?

[Just-Lisa-Now-]

Sch E. She was not self employed as a musician.

[Greta]

I didn't make it clear that those are two different clients. Author's widow's royalties go on Sch E.

The music royalties come to a former musician who is no longer active. His royalty incomes go on Sch C with social security tax and business license?

[Just-Lisa-Now-]

If they're no longer active, I dont think it goes on Sch C anymore...someone else will have to confirm.  But if its on a 1099MISC in the Royalties box, IRS will be looking for it on Sch E.

[Terry53029 · Accepted solution]

Good article from "The Tax Advisor" in part " 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. 7 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". Here is the link:

https://www.thetaxadviser.com/issues/2013/dec/kelley-dec2013.html

[PATAX]

Thanks for the information and Link Terry ... That is quite interesting.