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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

Accepted Solutions
Level 4

Do not enter it as a JE -- you very rarely enter JEs in Q...

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

12 Comments
Level 4

Do not enter it as a JE -- you very rarely enter JEs in Q...

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

Thank you!

Thank you!
Level 4

You're welcome. :)

You're welcome. :)
Level 1

Hi Michele, Will this way you are suggesting work for pay...

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

Suggest you fix expense account to be called "Tax Expense...

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

Should this deposit be backdated to tax year  the refund...

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

You Make Deposit for the Date you got the Money and you D...

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

Hi, I'm using Quickbooks desktop pro 2019.  This is for a...

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

"where do I go to enter a deposit?" Banking menu > Make...

"where do I go to enter a deposit?"

Banking menu > Make Deposit.
Level 3

hoymich you can make a deposit for tax refunds in the "Ma...

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

Thanks Diane and qbteachmt.  I appreciate the quick respo...

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

Re: You're welcome. :)

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