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AGMAIN
Level 2

How to account for year end discrepancy in loan interest

We have a small business loan that is set to auto pay on the 27th of every month. We are on a cash basis. On Dec. 27th it shows paid in Quickbooks, however it didn't clear the bank until Jan 2nd. I have a discrepancy between the amount of interest being reported by the Loan Company versus what Quickbook says I paid. Since Quickbooks counted the payment as 2023 it adds the interest into the total on my P&L for 2023, but the statement from the bank shows less interest since they didn't record the payment until Jan 2024. What is the correct way to deal with this? 

Solved
Best answer January 30, 2024

Best Answers
Rainflurry
Level 14

How to account for year end discrepancy in loan interest

@AGMAIN 

 

Ignore the 1099 and use your interest expense amount.  You should take the deduction as of the Dec. 27.  The IRS will not have any issue with it.  

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2 Comments 2
Clark_B
QuickBooks Team

How to account for year end discrepancy in loan interest

Hello there, @AGMAIN.

 

Let me help and provide information on how to account for your year-end discrepancy in loan interest in QuickBooks Desktop (QBDT).

 

To start, I suggest further checking the transactions entered in QuickBooks related to the interest amount reported by the loan company and QuickBooks. Also, please check your bank statement to verify what causes the discrepancy. I also recommend reaching out to your account for further guidance.

 

Regarding your other concern on what is the correct way to deal with the counted payments that add the interest in your P&L total for 2023 and the statement from your bank that shows less interest since it didn't record the payment until January 2024. This will depend on whether you use the cash or accrual method for your business. 

 

For future reference, you can check this article to guide you track your loan with the help of Loan Manager in QBDT: QuickBooks Loan Manager.

 

I'll always be here, ready to back you up if you have any further questions about the year-end discrepancy in loan interest or other QBDT-related concerns. Please let us know any time in the thread. Keep safe!

Rainflurry
Level 14

How to account for year end discrepancy in loan interest

@AGMAIN 

 

Ignore the 1099 and use your interest expense amount.  You should take the deduction as of the Dec. 27.  The IRS will not have any issue with it.  

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