Of the 246 phone calls that Akron-area tax experts answered Saturday morning in the final of three free tax call-in programs, many concerned such things as how to deal with Social Security, pensions and other retirement income.
But questions involving the burgeoning Ohio shale oil and gas industry also occupied accountants in the annual telephone conference sponsored by the Akron Beacon Journal and the Ohio Society of CPAs.
Saturday’s program was staffed by six certified public accountants from the firm of SS&G Inc. and three CPAs from Apple Growth Partners.
“We had quite a few phone calls. It’s been busy,” said Dave McClain, one of the SS&G volunteers.
This year’s three-day call-in program, plus a one-day online chat session with tax experts, answered 480 questions.
McClain said one caller Saturday told him that he had received $14,000 in royalty payments in 2011 from an oil and gas company that was drilling on his property.
The man wanted to know how to report the royalty income and also wondered if there was anything he could do to offset the income, McClain said.
“The income is reportable. It’s reportable on Schedule E,” McClain said.
Because the caller incurred legal fees related to the royalties, he could use the legal fees to offset some of that income, McClain said.
Someone else called Steven Magovac, an SS&G volunteer, also with a question on oil and gas royalty income.
If someone owns the mineral rights and receives royalty income, which is deemed a working interest, the income would be treated as self-employment income reportable on Schedule C, Magovac said.
“You have to pay Social Security tax on it,” he said.
There are ways to mitigate the tax consequences of these kinds of royalty payments, including taking what is called a percentage depletion, which is 15 percent of the gross royalty income, he said.
People who are now getting oil and gas royalty income really should consult with professionals to figure out the best ways to handle the related tax issues, Magovac said.
Brett Mangon of Apple Growth took a call from a woman who said she is 100 years old and still does her taxes by hand.
“She says it keeps her sharp,” he said. The woman had a question involving dividends and tax rates on stock she owned from Ohio Edison, where she had worked for many years, he said.
The caller said that buying the Ohio Edison stock “was the best thing she ever did,” Mangon said.
John Carey, an SS&G volunteer, said one call stood out.
“I had one guy who said, ‘I haven’t filed in 15 years,’ ” Carey said. “I said: Call a lawyer.”
Failure to file your taxes is a crime, Carey said.
But if someone comes forward with a lawyer to the IRS to fix that kind of a situation, “the IRS isn’t going to put you in jail,” Carey said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com