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Posting 941 refund

Received a refund for over-payment of 941 - where is best place to post it?  Income, against PR liabilities or ???

 

Thank you,

JR

Best answer a month ago

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Established Community Backer ***

Re: Posting 941 refund

IRS Form 941 is used to submit payroll taxes paid by employee and employer, so first need to know who overpaid to determine who gets refund, employee or employer.  Most likely was employer if refund check came to company.  A refund for anything should always be posted to same account where expense was originally posted.  Assuming you have an account for payroll taxes, I suggest post it there.  You don't want to post as new income since then you owe taxes on that as income. Don't want to post to liability account since that is amount you owe to tax agencies so it will cause you to underpay next time.

1 Comment
Established Community Backer ***

Re: Posting 941 refund

IRS Form 941 is used to submit payroll taxes paid by employee and employer, so first need to know who overpaid to determine who gets refund, employee or employer.  Most likely was employer if refund check came to company.  A refund for anything should always be posted to same account where expense was originally posted.  Assuming you have an account for payroll taxes, I suggest post it there.  You don't want to post as new income since then you owe taxes on that as income. Don't want to post to liability account since that is amount you owe to tax agencies so it will cause you to underpay next time.