How to record rental income tax payment

SheilaMN · ‎December 28, 2018

Last year, we paid income taxes which included profits from investment properties as a single payment. How do you calculate the tax portion that should be attributed to the investment property? How do you record this within quickbooks? And is this tax amount deductible from this year’s profits as an operating expense? Thanks for all your help!

john-pero · ‎December 28, 2018

Only C corporations pay tax on profits and I doubt you are a C corporation. S corp, LLC and partnerships or sole proprietors all pass through profit to personal returns and there is no business expense allowed for personal income tax. There also is no allocation of tax burden across all of your personal income. Consider a married couple filing jointly and each has wages. The wages are totalled before any tax is calculated, same with any other income that shows up on your personal return

SheilaMN · ‎December 29, 2018

John, Thanks for the reply. Yes, the rental income, minus expenses from the property, was added to our personal income to calcukate our tax owed. I guess the question is, within quick books (which keeps track of all income and expenses for the investment properties), do I reflect any tax payments onto the ledger?

qbteachmt · ‎December 30, 2018

The Income tax payment is posted as Owner Draw, to Equity. You took money from the business and used it to meet a personal obligation.

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How to record rental income tax payment