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RAILMAN
Level 2

Tax payments

Tax Payments to state and Fed for PREVIOUS years; either lump sum and/or installment plan...where do I put this payments in QB?

Sole prop...Im putting them in Owners Equity because I had to earn money in order to make the payments. 

AND ...does it help me to differentiate between tax; penalties; interest?

If anyone can help, thanks very much. 

3 Comments
qbteachmt
Level 15

Tax payments

Which tax: 1040, 940, 941?

RAILMAN
Level 2

Tax payments

Form 1040. Thank you

qbteachmt
Level 15

Tax payments

It's all Personal, then. None of this is part of the business entries. You Take money from the Business for whatever reason entitles you to take money, such as Owner Draw. You spend it on groceries, vet bills, personal taxes, etc. You track Nothing as tax expense, penalty or interest for the business, because this is not Business-related. The business contributes to your personal financial picture, which results in you having a tax filing, which expects you to have paid on time or enough, or you incur penalties and interest. Penalties are never reportable by a business, either, as expense. There is no business reason to incur penalties. Business Expense falls under "ordinary and necessary" and not "because I failed to comply." That's why Parking Tickets are not a business expense. Personal Taxes that you pay this year will be part of the reporting on this year's taxes, such as "On the state form, you report Fed taxes paid in this year, no matter which year it is For." They won't give you credit for penalties or interest, either. And not all States give this credit, of course, or you have to Itemize to get credit for Taxes paid to the Feds. The Fed Tax laws changed in Dec 2017, for State and local tax deductions or credits.

 

It's time to work with your own CPA, to stay out of even more trouble by handling this incorrectly.

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