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Level 3

How do we record a Corporate Tax Refund?

Our Corporation Notice of Assessment came in and we received a refund.  In the journal entry, do I debit the bank and credit the Federal Taxes Payable account (Other Current Liability) or the Taxes Payable (Expense account)?

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Best answer 03-11-2019

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Level 4

How do we record a Corporate Tax Refund?

Do not enter it as a JE -- you very rarely enter JEs in QuickBooks.  Enter it as a deposit, posted to the income tax expense account since it is a refund of your overpayment.

I hope this was helpful.

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Highlighted
Level 4

How do we record a Corporate Tax Refund?

Do not enter it as a JE -- you very rarely enter JEs in QuickBooks.  Enter it as a deposit, posted to the income tax expense account since it is a refund of your overpayment.

I hope this was helpful.

View solution in original post

Level 3

How do we record a Corporate Tax Refund?

Thank you!
Level 4

How do we record a Corporate Tax Refund?

You're welcome. :)
Level 1

How do we record a Corporate Tax Refund?

Hi Michele,
Will this way you are suggesting work for payroll tax refunds or will it make my account go negative next payroll tax payment?
I tried the payroll tax refund feature in the payroll feature but it messed with the accounts and I had to enter an adjustment, it was a mess using the payroll tax feature.
I was hoping just doing a deposit like you describe would be less of a mess...
Level 7

How do we record a Corporate Tax Refund?

Suggest you fix expense account to be called "Tax Expense" since "Tax Payable" is a liability account name.
Level 1

How do we record a Corporate Tax Refund?

Should this deposit be backdated to tax year  the refund was for or the date received?
Level 15

How do we record a Corporate Tax Refund?

You Make Deposit for the Date you got the Money and you Deposit this as "tax expense" refund, for a C Corp. For any other entity type, there is no Income Taxes expense for that entity.
Level 1

How do we record a Corporate Tax Refund?

Hi, I'm using Quickbooks desktop pro 2019.  This is for a corporation.  We received an income tax refund.  I see the Income Tax Payable account has a negative amount (which matches the amount we just received from CRA).  Can you tell me how to record a deposit to clear out this negative amount?   I know, it's a very basic question..."Enter it as a deposit, posted to the income tax expense account since it is a refund of your overpayment" .... where do I go to enter a deposit?  I normally go to  receive payments screen but that's for customer invoices, and not for corp tax refunds.  Any pointers are appreciated. Thx.
Level 15

How do we record a Corporate Tax Refund?

"where do I go to enter a deposit?"

Banking menu > Make Deposit.
Level 3

How do we record a Corporate Tax Refund?

hoymich you can make a deposit for tax refunds in the "Make Deposits" window.  You have to manually fill in the "Received From", "Account", "Memo" etc.  Then Save and Close.
Level 1

How do we record a Corporate Tax Refund?

Thanks Diane and qbteachmt.  I appreciate the quick response.  I figured it out right after I posted the question....glad it's the same as your suggestion, re-assuring  :-)
Level 1

How do we record a Corporate Tax Refund?

it is a new question.

The company expects tax refund because of SR&ED credit . If I debit A?R and credit A/p in 2018(I am filing the T2), I can offset A/r with the bank when I receive it but what should I do withA/P. Does it last for ever in balance sheet?

 

Thank you