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Senior Explorer *

How do I enter a cash back credit?

My company credit card has a cash back rewards program.  I just took that cash back and applied it to my account as a credit (lower my next CC bill).

How do I enter that cash back credit in Quickbooks?  

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Best answer 12-10-2018

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Established Community Backer ***

use enter CC charges, top left set to a credit, select an...

use enter CC charges, top left set to a credit, select an income account, I create one called rebate income, and enter the amount

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16 Comments
Established Community Backer ***

use enter CC charges, top left set to a credit, select an...

use enter CC charges, top left set to a credit, select an income account, I create one called rebate income, and enter the amount

View solution in original post

Senior Explorer *

Thanks.  I did what you said and it worked.  I left the "...

Thanks.  I did what you said and it worked.  I left the "Purchased From" field blank and now it just says "No Name".  Should I have written something in there or does it not matter?
Established Community Backer ***

it does not matter, I leave it blank, or in one file I cr...

it does not matter, I leave it blank, or in one file I created an other name called cash back and use it
Not applicable

Doesn't feel right to call this income.  I think it makes...

Doesn't feel right to call this income.  I think it makes more sense if it is classified as an expense. Cash back is a Contra-Expense account. It will reduce expense and have the same bottom line effect as increasing income.
Established Community Backer ***

No it is not an expense. Technically it is a reduction of...

No it is not an expense.
Technically it is a reduction of expense, each and every purchase you made that accumulated cash back reward points - Not only is that impossible to track, but it might also extend to previous fiscal years.

The company got value, that is income
Not applicable

IRS states: “A rebate received by a buyer from the party...

IRS states:

“A rebate received by a buyer from the party to whom the buyer directly or indirectly paid
the purchase price for an item is an adjustment in purchase price, not an accession to
wealth, and is not includible in the buyer’s gross income. See Rev. Rul. 76 – 96, 1976 – 1 C.B. 23,
as modified by Rev. Rul. 2005 – 28, 2005 1 C.B. 997.”

So, it’s not income. Perfect world would be to reduce each purchase price, but we don't live in a perfect world.  Perhaps you could create a new expense account (i.e. CC Rewards). Unfortunately, you will always have a negative balance. I am not an accountant, just sharing what I know.
Established Community Backer ***

Cash back rewards are not a rebate, a rebate is immediate...

Cash back rewards are not a rebate, a rebate is immediate (well they take their time)
Established Community Backer ***

Make your Rewards account either Other Income or Other Ex...

Make your Rewards account either Other Income or Other Expense.

As Other Income, it is not part of Gross Receipts.

As Other Expense, it will run negative because it Reduces the total expenses you can report.

And either way, it falls to the bottom of the P&L.

Established Community Backer ***

You use the Card Provider's name as payee on the payment...

You use the Card Provider's name as payee on the payment transaction. You can use that same name on the Credit.

Senior Explorer *

The field says Purchased From, not Payee.  That's why it...

The field says Purchased From, not Payee.  That's why it seemed odd to put the CC company name.
Established Community Backer ***

Same difference: Name for this transaction. They are the...

Same difference: Name for this transaction. They are the company that gave you this credit. Payee = Purchased From, for cash and checks, right?

Super Contributor **

Re: use enter CC charges, top left set to a credit, select an...

Does this workflow/instructions apply to QB Desktop Pro?

Moderator

Re: use enter CC charges, top left set to a credit, select an...

Hello EBFinancials,

 

Welcome to the Community. I'm here to assist you with any questions you may have concerning cash back rewards in QuickBooks Desktop.

 

The process of recording cash back rewards are almost the same with QuickBooks Online. You can track the points until you use them.

 

These rewards are income to the business either you apply them as a credit reducing the balance or acquire a check and create a deposit.

 

You can create an Other Income account by following these steps:

 

  1. Click the List tab at the top menu bar.
  2. Select Chart of Accounts.
  3. Click the drop-down arrow next to Account.
  4. Click New.
  5. Choose Other Account Types, and select Other Income.
  6. Click Continue.

 

Please know I'm always available anytime you need assistance concerning the process. The Community will be sure to get back to you.

Not applicable

Re: Doesn't feel right to call this income. I think it makes...

LLC owner in Arizona here. I've had my company taxes prepared by a professional CPA firm here in Arizona for a decade, and cash back rewards for cards are considered as rebates by the IRS. We've been filing as such for years, no problems. Please contact a CPA or other tax professional in your jurisdiction, your mileage may vary, but I thought my experience could be valuable here.

Not applicable

Re: use enter CC charges, top left set to a credit, select an...

very new to this program

 

Highlighted
QuickBooks Team

Re: use enter CC charges, top left set to a credit, select an...

It's nice to see you here in the Community, @sneligan.

 

You can enter the cashback credit as an income to your company. I can guide you through the steps.

 

As mentioned above, you can continue to track your cashback rewards until you utilize them.

 

You'll need to create an income account for your points. Here's how:

  1. Click on Lists from the menu bar.
  2. Choose Chart Of Accounts.
  3. From the Account drop-down, select New.
  4. Select Income from the Account Type window.
  5. Click on Continue.
  6. Enter the Account Name and other details.
  7. Click on Save & Close.

 

Once done, you can now record the cashback credit. You can follow the steps below:

  1. Click on Banking from the menu bar.
  2. Choose Enter Credit Card Charges.
  3. Enter the name on the Purchased From field.
  4. Select the account you created.
  5. Enter the amount of the charge.
  6. Click on Save & Close.

 

You can always get back to me if you have any other questions or concerns. I'll only be a post away.

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