Adjusting Tax instalments to account for interest paid by CRA

RogerLeclair · ‎January 11, 2022

CRA applies a Credit to my client's HST account for the following year stemming from interest owed to them from an overpayment.

In QBOA, in Taxes, there in an Interest/Penalty option. Choosing that provides the fields:

Assessment Date:

Adjustment Account:

Amount:

For starters, within Adjustment Account there are no income accounts showing only Expense Accounts.

Secondly, the Amount field will not accept a negative amount to reflect income vs. interest expenses.

How does one set up to post Interest EARNED to a specific Income Account?

RogerLeclair · ‎January 13, 2022

After speaking with Intuit Support, there is no method within the "Taxes" module to record interest RECEIVED from CRA only interest PAID to CRA. Therefore the solution that I can make work is:

Post the interest amount as an Installment Payment for the period to which the interest credit was applied. This corrects the Tax module to reflect the actual balance showing at CRA and updates the GST/HST Suspense G/L account to where you want it to be.

Correct the journal posting by DR to whatever account you used to make the installment payment and CR Interest Earned to reflect the income.

View solution in original post

PrachiJoshi · ‎January 11, 2022

Let us your client was refunded $105 in the bank. $100 was the refund amount and $5 was the interest paid by CRA.

You will enter $100 using the sales tax module and the bank account.

Then you will create a journal entry as follows:

DR Bank 105

CR Bank 100

CR Interest income 5

Also enter a note, so that you know why you made this entry in the future.

RogerLeclair · ‎January 11, 2022

Thank you for your attempt to assist. However, the interest was applied to next years’ installment payments, therefore no bank deposit. The end goal is to show the correct installment amount within the “Taxes” module for that period.

JamesM4 · ‎January 12, 2022

Hi RogerLeclair. QuickBooks is the go-to program for staying on top of your accounting in your field of business. I'll be glad to share more info so you're on the right track with your work. Based on the details you've provided, I see you benefiting more by reaching out to an accounting professional for expert advice on how you can record your transaction accurately. Doing this ensures that your books remain clean. In case you're not in contact with a professional, I encourage you to reach out to one on our site using this link here. Feel free to ask other questions. I'll be here.

RogerLeclair · ‎January 13, 2022

I suppose this is the wrong forum for asking software support questions.

"Based on the details you've provided, I see you benefiting more by reaching out to an accounting professional for expert advice on how you can record your transaction accurately."

As an accounting professional, I suppose I could click your link and choose myself...however that will not help me. The details I provided did not ask for accounting advice, or which accounts I should be using to post interest earned on interest paid by CRA. The question relates simply to the "Taxes" module in QBOA, under the "New" dropdown there is an option for "Interest/Penalty". (see attached pic)

Option works fine for penalties but there does not seem to be a method of entering interest earned (see details of original post).

NOT A BOOKKEEPING QUESTION, a QB program operation question.

RogerLeclair · ‎January 13, 2022

After speaking with Intuit Support, there is no method within the "Taxes" module to record interest RECEIVED from CRA only interest PAID to CRA. Therefore the solution that I can make work is:

Post the interest amount as an Installment Payment for the period to which the interest credit was applied. This corrects the Tax module to reflect the actual balance showing at CRA and updates the GST/HST Suspense G/L account to where you want it to be.

Correct the journal posting by DR to whatever account you used to make the installment payment and CR Interest Earned to reflect the income.

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Adjusting Tax instalments to account for interest paid by CRA