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WIT
Level 2

Non-Deductible Expenses - Recording and Reporting

 

Has anyone found a better solution to show/report "net profit after tax & non-deductible expenses" than those suggested below? These appear clumsy and unnessecarily labor intensive!

 

Question: How are "non-deductible" expenses recorded and reported?

e.g.

  • expenses incurred by a company but not allowed as deductions to calculate the taxable income (such as fines, some client or customer meals &/or entertainment, etc.) or
  • personal expenses incurred by an individual


Current Answer:

Record them with the category of "Other Expenses" then manually add them back to the Net Income reported by QB to give the actual Taxable Income.

 

Authority (quotes & references):

 

 Reference #1: GAAP Presentation

“In GAAP prepared financial statements, non-deductible expenses are not segregated from other business expenses on the Statement of Income and Expense. However, these non-deductible expenses must be added back to net income when calculating the income tax expense on taxable income.“

 

Source:

https://bizfluent.com/info-10029058-presentation-nondeductible-expenses-audited-financial-statements...

 

Reference #2:

"From a personal tracking point of view it's a good idea to reconcile the bank accounts, so you should not exclude transactions, as if you do, you can't reconcile. You can even:

 

  • categorize personal expenses, under "Other Expense" type accounts, and then the Operating Income in the P&L (which does not include "Other Expense" accounts) is the taxable income, before adjustments, like mileage.and

     

  • post business expenses as regular "Expense" type accounts"

 

Source:

https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-to-manage-personal-expe...

1 Comment 1
IntuitAika
Intuit

Non-Deductible Expenses - Recording and Reporting

Hi WIT,

 

Thanks for posting in the Community! I can see that you've posted a similar query about non-deductible or non-allowable expenses in a different conversation. With this, I'd recommend visiting the said thread through this link for further details. 

 

Also, you can check this QuickBooks Blog for your reference: Guide to Tax Deductions in Australia
 

Feel free to post again if you have any other questions. Have a nice day!