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Experienced Member

Unpaid Invoices At End of Year (Total Income is Inaccurate)

I am working on prepping for taxes and I have an issue in that my income shows as higher in QuickBooks (Online) than the money I actually earned. This is because as of December 31, there were multiple open invoices.

 

The invoices have been paid in the 3 months since, but that's all income that was received this year not last year. I am going to file taxes and I don't want to be taxed on money I didn't make last year.

 

I read some notes on writing off bad debt following this tutorial, but I have two issues:

  1.  I don't know if it's technically "bad debt" because it is/was collectible and it was eventually paid (the tutorial notes "Bad Debt" as "non-collectible").
  2. When I try to apply the credit memo, I can't point to the right invoices because they've been paid.

 

Any thoughts on what I should do? Should I just explain the situation to my accountant or is there something I can do in QuickBooks (Online) to get around this and make my income reflect the actual money received last year?

Solved
Best answer 03-31-2019

Accepted Solutions
Established Community Backer ***

Re: Unpaid Invoices At End of Year (Total Income is Inaccurate)

Bring up the P&L and look at the basis of the report, change the basis to cash if you file taxes as a cash basis taxpayer

 

accrual basis = income and expense is yours when you save the invoice or bill

 

cash basis = income is yours when you receive it, and expense is yours when you pay the bill

2 Comments
Established Community Backer ***

Re: Unpaid Invoices At End of Year (Total Income is Inaccurate)

Bring up the P&L and look at the basis of the report, change the basis to cash if you file taxes as a cash basis taxpayer

 

accrual basis = income and expense is yours when you save the invoice or bill

 

cash basis = income is yours when you receive it, and expense is yours when you pay the bill

Experienced Member

Re: Unpaid Invoices At End of Year (Total Income is Inaccurate)

OMG THANK YOU SO MUCH!!!