Entrepreneurship & Small Business

Quickbooks - how to record coporate tax installment

  • Last Updated:
  • Jan 3rd, 2015 4:06 pm
Tags:
None
[OP]
Jr. Member
Jan 13, 2014
130 posts
23 upvotes
Toronto, ON

Quickbooks - how to record coporate tax installment

Are here any QuickBook pros that could help me.

How do I record in QuickBooks Corporate Tax installments and payments? Do I create special Account with type "Other Current Liability" and use that for tracking installments and payments? Or should this go through "Sales Tax item list"?

Thank you in advance!
2 replies
Newbie
Dec 30, 2014
2 posts
4 upvotes
Sudbury
Your corporate tax instalments are not related to your sales taxes. You should record instalments in an "Income Taxes Payable" account which could be classified as an "Other Current Liability" on your balance sheet.

Example: You are making a $10,000 instalment payment towards taxes:

Debit Income Taxes Payable (Balance Sheet) $10,000
Credit Cash (Balance Sheet) $10,000

At year-end you (or your tax preparer) would record the provision for the current year against your instalments. Let's say for simplicity sake that your current year tax burden is $8,000, but you made instalments of $10,000 as per the above. Your journal entry is as follows:

Debit Provision for Income Taxes (Income Stmt) $8,000
Credit Income Taxes Payable (Balance Sheet) $8,000

You are left with a net refundable of $2,000 in your "Income Taxes Payable" account on your balance sheet. When you file your corporate income tax return and CRA assesses it, you will receive the $2,000 back plus likely some interest. Let's say for example you receive $2,100 back ($2,000 relating to the overpayment and $100 in interest income). Your journal entry is as follows:

Debit Cash (Balance Sheet) $2,100
Credit Income Taxes Payable (Balance Sheet) $2,000
Credit Interest Income (Income Statement) $100

Cheers,
WiseOwl
[OP]
Jr. Member
Jan 13, 2014
130 posts
23 upvotes
Toronto, ON
WiseOwl,

Thank you very much for such detail answer!

Top