How do I categorize a Federal Tax refund?

Glad to see you here in the Community, @elkeruth9.

There are two options on how you can handle this refund in QuickBooks Self-Employed. Before you begin, I recommend reaching out to an accountant or tax adviser to ensure you're posting it to the right account.

The first option is to locate the original income you recorded and mark it as excluded. This will be removed from the estimated tax calculation. You don't have to record the refund since this isn't part of the schedule C category.

To exclude the transaction: 

1. Open the transaction from the Transaction page.
2. Click Exclude.
3. Select Save once you’re done.

Should you need to record this refund, the second option would be to mark it as personal expenses or business other expenses. However, as mentioned above, you'll have to exclude the original income to exclude the estimated taxes. 

Let me add these resources to learn more about handling your taxes in QBSE:

• How QuickBooks Self-Employed tracks self-employment taxes
• Get quarterly and annual tax info from QuickBooks Self-Employed

Fill me in if you have other questions you'd like to add. I'm always here to help.

Hi @elkeruth9,

Hope you’re doing great. I wanted to see how everything is going about handling tax refund. Was it successful? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.

Looking forward to your reply. Have a pleasant day ahead!

How come a tax refund is categorized as expense, when it's clearly an income?

I'm referring to payments received from state / IRS, and not withheld or estimated tax expenses to be paid in a future date.

Thanks for joining the thread, @wasseem. I'm here to lend a hand in recording a refund in QuickBooks Self-Employed.

In QBSE, the option to categorise refunds is currently unavailable. The expense can be recorded, but it must be excluded once reimbursed. 

Here's how to enter the transaction:

1. Go to the Transaction menu and then select Add Transaction.
2. Enter the amount and the description.
3. Browse the Select a category menu and choose the best option to organize your transaction. 
4. Click on Save.

From there, you can now exclude the transaction. Let me guide you on how:

1. Go Transactions.
2. Locate the expense or refund transaction.
3. Click on the arrow icon to expand the transaction.
4. Select Exclude this transaction (this is for duplicates, reimbursements, customer refunds, and returned purchases) checkbox.
5. Click on Save.

For more details about categorizing your downloaded transactions from your bank, feel free to check out this article: Categorize transactions in QuickBooks Self-Employed.

In addition, I've included an article about how to split a transaction in QBSE by a percentage. This ensures the accuracy of your record: Categorize Income and Expenses.

I’m always ready to assist you if you have any other questions or concerns about managing transactions in QBSE. Tag me in your reply and I’ll sprint back into action. Have a good one and keep safe.

There is no arrow icon that leads to "exclude transaction" once the transaction is created. I am using QuickBooks Self Employed

I agree with you, @NTorresOnline.

The Exclude this transaction checkbox is unavailable for the uploaded transaction in QuickBooks Self-Employed. I'm here to share other options to remove the manually added transactions.

We can only remove added transactions by hitting the Delete button. See this screenshot below to picture out the steps:

Furthermore, when you have similar transactions from the same client or supplier, the ideal way is to have a bank rule. Explore how to establish and apply rules to classify current and previous transactions on this page: Create rules to speed up reviews in QuickBooks Self-Employed.

Please know that you are always welcome here if you need a guide to categorize transactions in QuickBooks Self-Employed. Enjoy your weekend.

I have excluded the tax refund, but it is still showing up on my Balance sheet - it won't let me keep the category empty - which category to use with the excluded tax refunds?

Hello, greenchive. 

As mentioned above, you can categorize it as an expense and then exclude the transactions once reimbursed. 
 

Also the data in the balance sheet will still remind even it is already excluded. Don't worry, it won't affect on your taxes since the transaction is already excluded. 
 

I'm also adding these links about categories in QBSE: 

• Schedule C and expense categories in QuickBooks Self-Employed
• Updates to expense categories in QuickBooks Self-Employed
• Custom categories in QuickBooks Self-Employed 

Please don't hesitate to drop your comment below if there's anything else that I can help you with. I'll be glad to help. Take care and have a great weekend.