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Level 3

how to handle a pass thru expense

We received a check that we deposited into our account from our accountant for a penalty we incurred for late payments.  Since it was her mistake, she paid us the full amount of the penalty.  I now plan to write a check to send out the penalty to the company to whom we owe the penalty.

  

What categories should I use, or how should I enter it so that it basically shows up as  a wash or pass thru type item.  I don't think the payment should count against our expenses but not exactly sure how to make that happen.  I wasn't sure if I needed to do anything special? Or can I just deposit the money into the category/account involved and then pay out the amount using the same category/account?

 

Thanks in advance!

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Best answer April 07, 2020

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Community Champion

how to handle a pass thru expense

Use the same account for both and it will be a wash as it should be. Certain penalties (like to government agencies) are not deductible in any event. If you ever might have non-ductible expense of your own you may wish to set up an expense account called "Non-Deductible Expenses", Any actual expenses will show on your P&L but your tax CPA will know to remove them prior to tax filing (in fact if you map accounts to tax forms this account would not be mapped)

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2 Comments
Highlighted
Community Champion

how to handle a pass thru expense

Use the same account for both and it will be a wash as it should be. Certain penalties (like to government agencies) are not deductible in any event. If you ever might have non-ductible expense of your own you may wish to set up an expense account called "Non-Deductible Expenses", Any actual expenses will show on your P&L but your tax CPA will know to remove them prior to tax filing (in fact if you map accounts to tax forms this account would not be mapped)

View solution in original post

Highlighted
Level 3

how to handle a pass thru expense

Thank you.  It worked perfectly.  

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