Question

Corporate Federal Income Tax Deposits

Forum|Forum|4 years ago
April 7, 2022
3 replies
55 views

Hello all. We are looking for a more efficient method to account for estimated corporate federal tax deposits (not personal) that are due every quarter. Currently we use an equity account for the estimated deposits made to offset the bank credit but that equity then shows on our balance sheet as a negative. I realize that many here use QB for Sch C or sole prop but we are a C corp using 1120 and we can find no articles on how others enter these transactions. Thanks in advance.

BigRedConsulting

Level 15

Corporate taxes are an expense. A good way to set up the account is as an Other Expense because other expenses appear at the bottom of the P&L after the Ordinary income/expense section:

F

Freedomeagle

IPTacctq, my question is similar to yours. Corporate federal income tax is not a deductible expense so I'm not quite sure how one categorizes it as "other expense" in the chart of accounts and expects it not to be included in the P&L. Furthermore, if your company is setup to use form 1120, its going to pull the Net Income rather than the Net Ordinary Income from the P&L into the balance sheet which is incorrect.

So, my question is this: We are an LLC filing as a C Corp. using Form 1120. I have paid my federal income tax for 2021 but can't figure out how to actually post it in QB.. 1) how should the chart of account be setup for the payment; 2) are there any journal entries I should make following the entry to clean up the equity line on the balance sheet?

Z

ZackE_

Moderator

Welcome to the Community, qglasspa.

To properly identify how your chart of accounts should be set up for entering a federal income tax payment and if any journal entries should be made, I'd recommend working with an accounting professional.

If you're in need of one, there's an awesome tool on our website called Find an Accountant. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

Here's how it works:

Go to our Find a ProAdvisor page.
Use the City or ZIP search field to specify a location.
Select Find a ProAdvisor.
Browse through your results and find one that works best for the business. You can click on each ProAdvisor's profile to learn more information about them.

Once you've found an accountant, they can be contacted through their Send a message form:

Use the available text box to introduce yourself. Be sure to include details about which services you're looking for.
Enter your appropriate info in the Your name, Your email, and Your phone number (optional) fields.
Hit Send message.

I've also included a couple detailed resources about working with your chart of accounts screen and journal entries which may come in handy moving forward:

Please feel welcome to send a reply if there's any questions. Have a great day!

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