How do i record interest on an HST refund?

You can use a journal entry and undeposited funds to record the interest for your HST refund in QuickBooks Online (QBO), @jhgauthier1.

First, you’ll need to set up an Interest Income account, which will serve as a temporary holding account. The account type should be Other income, and the Detail type should be Interest Earned.

Once you’re done, record the principal HST refund to the Undeposited Funds account. Here’s how:

1. Go to Taxes, then find the filed return that resulted in the refund.
2. In the Action column, click the dropdown arrow, then Record refund.
3. On the Refund Amount, enter the principal refund amount excluding interest.
4. On the Refund To, select Undeposited Funds and enter the date you received the deposit in the bank.
5. Click Record refund.
   

Next, you’ll need to record the interest using a journal entry to undeposited funds. This will record the interest as income, also directing it to the temporary holding account.

Here’s how:

1. Click +New then Journal Entry.
2. Enter the date you received the bank deposit.
3. On the first row, select Undeposited Funds, then the interest amount on the debit.
4. On the second row, select the Interest Income account, then the interest amount on the credit.
5. Once you’re done, click Save and Close.
   
   
   

After that, create a bank deposit to match the bank feed. Since you already have the full amount sitting in Undeposited funds, let’s move it to a bank account to match the single deposit. When creating a bank deposit, select the refund transaction from step 1 and the journal entry from step 2. These two items should exactly match the amount that appears on your bank statement.

Lastly, match the deposit in your bank feed by clicking Match to your downloaded bank transaction for the HST refund or interest deposit.

In addition, consulting with a professional accountant is the best way to get specific guidance on recording this interest and ensuring your books are accurate for tax filing.

Feel free to go back to this thread if you have more questions.