Definition
Payments for the use of your property, such as music, books or videos you hold the rights to; where it goes on your return depends on whether you are in business.
What it means
Royalties are payments for the right to use property such as copyrights on music, books and videos, patents, or oil and gas rights. In the U.S. they are taxable income. Royalties from property you hold as an investment are generally reported on Schedule E and are not subject to self-employment tax. If you are self-employed as a writer, musician, artist or other creator and receive royalties from your own active work, you generally report them on Schedule C, where self-employment tax applies. Platforms may report royalties on Form 1099-MISC. For people outside the U.S., royalties are U.S.-source income when the property is used in the U.S., so withholding and tax treaties apply.
Example
A songwriter who earns $3,000 a year from streaming royalties on songs she writes as her business reports them on Schedule C.
Illustrative numbers only. Your situation will differ.