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Randy6
Level 2

Credit Cards

Should credit card payments show up on the P & L as an expense?  For tax purposes how do you account for credit card payments which usually post to the credit card account.

Solved
Best answer April 05, 2020

Best Answers
BigRedConsulting
Community Champion

Credit Cards

@Randy6RE: So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

 

All of it.  CC charges are considered same as cash, both for GAAP/Management purposes and for taxes.

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7 Comments
BigRedConsulting
Community Champion

Credit Cards

No, they shouldn't.  The charges themselves are an expense, like checks in a bank account.  Later, paying the debt those charges create is not an expense.

 

This is similar to a mortgage or other loan, where the payment is not an expense, though the interest the loan charges is.

 

 

Randy6
Level 2

Credit Cards

Thank you.   So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

IntuitLily
Moderator

Credit Cards

Hello, @Randy6.

 

You can record a credit card credit for the remaining $250 and use another account for that refund to write off the amount. You can set up a clearing account to move your money from one account to another easily. Just refer to this article for details: Set up a clearing account

 

Here's how to enter a credit card credit in QuickBooks:

 

  1. Go to the Banking menu and click Enter Credit Card Charges.
  2. Select the radio button for Refund/Credit.
  3. Enter the necessary details.
  4. Choose the account for the refund.
  5. Click Save & Close when done.

credit card credit.PNG

You may also refer to this article for more info about removing vendor balances: Write off customer and vendor balances.

 

If you have other questions, please feel free to drop by again. I'm here to help. Take care and have a good one.

BigRedConsulting
Community Champion

Credit Cards

@Randy6RE: So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

 

All of it.  CC charges are considered same as cash, both for GAAP/Management purposes and for taxes.

View solution in original post

BigRedConsulting
Community Champion

Credit Cards

@IntuitLily 

Your answer has nothing to do with the question and isn't appropriate.

Jonnybegood
Level 1

Credit Cards

How does this work in the Online version  2021

MaryJoyD
QuickBooks Team

Credit Cards

I can show you how to record credit  card payments in QuickBooks, @Jonnybegood.

 

Are you trying to record credit card payments in QuickBooks Online (QBO)? If so, you can do it by recording it from the Pay down credit card feature or by writing a check and then creating a transfer. 

 

Here's how to use the Pay down credit card option:

 

  1. Go to the + New button and select Money Out (if you’re in Business view), (if you’re in Accountant view), select Pay down credit card.
  2. Select the credit card you made the payment to.
  3. Enter the payment amount, date of the payment and the bank account you paid the credit card with.
  4. Provide all the necessary information. 
  5. Click Save and Close.

If you choose to write a check:

 

Write a check: If you made a credit card payment using a check, you can record it in QuickBooks by creating a check.

  1. Go to the + New button and select Check.
  2. Provide all the information
  3. Don't forget to enter the Category details and a payment amount, description and an amount.
  4. Click Save and Close.

Then, create a transfer:

  1. Go to the + New and choose Transfer.
  2. From the Transfer Funds From  dropdown menu, select the bank account the credit card was paid from.
  3. From the Transfer Funds To  dropdown menu, select the credit card that the payment went to.
  4. In the Transfer Amount field, enter the amount of the payment.
  5. Select Save and close.

You can check this article for more information: Record your payments to credit cards.

 

The following article also tells you more on how to recurring credit card payments in QuickBooks Online: Recurring Credit Card Payment FAQs.

 

Let me know if there is anything that I can help you with recording your transactions or you mean something else, by leaving a comment below.​ Take care and have a wonderful day!

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