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dpfrey66
Level 2

How do cash back deposits affect business expense accounts?

When I use my debit card I get cash back transactions that deposit a percentage of each purchase back into my checking account. The account is connected so the transactions go into my QuickBooks Self Employed. I see that the cash back deposit is imported as a positive value transaction while the charges show up as a negative value transaction. My question is this: I have a 50 cent cash back deposit from a $5 purchase and I categorize as a gas and fuel expense. If I take that 50 cent cash back deposit transaction and also categorize it under gas and what effect will it have on the total of the gas and fuel category when I run a report? Since it was imported as a positive number, will it have the effect of reducing the total in my gas and fuel expense account by 50 cents? Or would it still end up increasing the value in my expense account I am only asking because if it is the former, then I wouldn't have to make an adjustment to my schedule C automobile expense category when I export my QuickBooks Self Employed into Turbo Tax. If its the later, then I would need to subtract the total of the cash back from my total gas and fuel expense, since it isn't recorded as taxable income, but instead would also need to lower my deduction by that amount.
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Best answer February 28, 2021

Best Answers
ChristieAnn
QuickBooks Team

How do cash back deposits affect business expense accounts?

Hi there, dpfrey66.

 

Thank you for coming back here to QuickBooks Community. I appreciate you for providing detailed information about your concern. I'll share information to ensure you're able to handle cashback entry.

 

When it comes to cashback, it depends on how your account or business handles this transaction. If you want to report this cashback on your tax return, this isn't necessary since a discount isn't taxable. However, there may be a time when you have to reduce the amount of a deduction to reflect the discount that a cashback provides. That being said, when claiming deductions for expenses where you are given cash back, you'll only claim the actual price and deduction then split the $5. Which is $4.95 Schedule C Gas and Fuel and $.05 personal expense. The .05 will tag as personal and you're not allowed to claim this as income.

 

I still suggest consulting an accountant to assist you further in choosing the right way on how to properly handle the cashback. This is to make sure your account stays accurate.

 

Please refer to this article to see information on how QBSE is designed to help you record your self-employed income and expenses, track mileage, and prepare your Schedule C: QuickBooks Self-Employed Overview.

 

Know that you can always get back to me if there's anything else that you need. I'll be here for you. Have a good one!

View solution in original post

1 Comment
ChristieAnn
QuickBooks Team

How do cash back deposits affect business expense accounts?

Hi there, dpfrey66.

 

Thank you for coming back here to QuickBooks Community. I appreciate you for providing detailed information about your concern. I'll share information to ensure you're able to handle cashback entry.

 

When it comes to cashback, it depends on how your account or business handles this transaction. If you want to report this cashback on your tax return, this isn't necessary since a discount isn't taxable. However, there may be a time when you have to reduce the amount of a deduction to reflect the discount that a cashback provides. That being said, when claiming deductions for expenses where you are given cash back, you'll only claim the actual price and deduction then split the $5. Which is $4.95 Schedule C Gas and Fuel and $.05 personal expense. The .05 will tag as personal and you're not allowed to claim this as income.

 

I still suggest consulting an accountant to assist you further in choosing the right way on how to properly handle the cashback. This is to make sure your account stays accurate.

 

Please refer to this article to see information on how QBSE is designed to help you record your self-employed income and expenses, track mileage, and prepare your Schedule C: QuickBooks Self-Employed Overview.

 

Know that you can always get back to me if there's anything else that you need. I'll be here for you. Have a good one!

View solution in original post

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