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Buy nowMy S Corp holds the note of a mortgage that pays P+I each month. I created an income called "Earned Interest" and I put most of my entries using that which comes out under "Income" on the P&L statement. But twice I goofed and put it as Quickbook's "*Int Income" which is comes out on the P&L statement under "Other Income". Can someone explain what the difference is and why the distinction is made.
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@pedz Yeah; you'll probably receive a 1099-INT reflecting each of the amounts as year end, but it won't hurt to have it on your P&L either.
I'd class interest income as just Income, not Other Income, but as long as it's accurately labelled, any tax preparer worth their salt would understand where to put it.
There aren't too many examples of Other Income I'm familiar with; perhaps an insurance claim payout.
@pedz Other Income is income that isn't necessarily taxable or otherwise part of your normal business operations.
Other Expenses works much the same way; for instance, if you filed your payroll taxes late and were penalized by the IRS or your respective state, the penalties and interest would be recorded as an Other Expense, whatever you choose to name it.
That is, Other Expenses are expenses, but not tax-deductible expenses.
Other Income works pretty much the same way.
It's a way of categorizing income and expenses that just don't quite fit the usual definition of income and expenses, but aren't equity draws or liability payments either.
Thank you.
But I still have to show the interest income on my taxes -- right? I realize that it is "passive income" but it is still money that needs to be taxed -- right?
@pedz Yeah; you'll probably receive a 1099-INT reflecting each of the amounts as year end, but it won't hurt to have it on your P&L either.
I'd class interest income as just Income, not Other Income, but as long as it's accurately labelled, any tax preparer worth their salt would understand where to put it.
There aren't too many examples of Other Income I'm familiar with; perhaps an insurance claim payout.
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