How do I map/adjust income tax paid from my current account in quickbooks?

hellomadhur · ‎September 26, 2019

I have paid income tax from the previous financial year FY-2018-19. How do I adjust it in quickbooks?

Shall I save it as an expense or something else? Please suggest.

Thanks

hellomadhur · ‎September 26, 2019

Below is the response I got from my CA.

Two entries have to be made for Income tax

1) On 31/03/2019: we need to show it as Income Tax Expenses (in Profit & Loss Account) and since it is not yet paid the same amount is also to be shown as Provision for Income Tax in the Balance Sheet Current Liabilities side.

2) On the date of Payment of Income Tax (say 30/08/2019) : The Amount which was shown as Current Liabilities has to be shown as now paid.

I created a Journal Entry.
For the Account 'Income Tax Expense' in the 'Debit' column, I have put the tax amount.
For the Account 'Provision for Income Tax' in the 'Credit' column, I have put the tax amount.
Now, the online transaction I've done with my synced bank account matched the Provision for Income Tax.

View solution in original post

hellomadhur · ‎September 26, 2019

Below is the response I got from my CA.

Two entries have to be made for Income tax

1) On 31/03/2019: we need to show it as Income Tax Expenses (in Profit & Loss Account) and since it is not yet paid the same amount is also to be shown as Provision for Income Tax in the Balance Sheet Current Liabilities side.

2) On the date of Payment of Income Tax (say 30/08/2019) : The Amount which was shown as Current Liabilities has to be shown as now paid.

I created a Journal Entry.
For the Account 'Income Tax Expense' in the 'Debit' column, I have put the tax amount.
For the Account 'Provision for Income Tax' in the 'Credit' column, I have put the tax amount.
Now, the online transaction I've done with my synced bank account matched the Provision for Income Tax.

svaishnavi · ‎September 26, 2019

Hi Madhur,

Welcome to QuickBooks Community!

If you have a liability account where you track the amount of income tax you owe, you can use the same account to record payments. This way, the account will balance out as you pay off the "debt" you owe in taxes.

If you don't use a liability account, an expense account may be a better choice for you, as long as your personal and business funds don't mix.

In either scenario, we recommend speaking with an accounting professional to make sure everything gets entered properly.

Hope this helps!

asha_kanta_sharma · ‎July 03, 2020

Completely agree with your views.