What is the proper way to record an estimated tax payment that happens over multiple years in a single owner S corporation. Transactions:
6/15/2017 - Payment to IRS for 2nd quarter tax estimate
6/15/2017 - Payment to State for SUTA
1/15/2018 - Payment to IRS for 4th quarter tax estimate
1/15/2018 - Payment to IRS for FUTA
Record payments to a SUTA, FUTA, or Federal Withholding expense category. This reduces net income when it is a pass through entity. Reporting isn't accurate since it misses the 2018 payments for 2017.
Create an Asset account for Prepaid Taxes. Payments through the year get logged into this account. At the end of the year create a journal entry that pays the SUTA, FUTA, FICA expense accounts. The balance sheet will report a negative asset balance, so shouldn't a liability account be used instead?
Create a liability account for Taxes Payable and a journal entry for the end of the year for total taxes owed. Payments apply towards the liability through the year and the next. Final journal entry tax payment at the end of the year that pays the SUTA, FUTA, FICA expense accounts from the liability account.
Create an equity account for Owner's Estimated Taxes. Payments reduce the equity through the year. Create journal entries at the end of the year that pays the SUTA, FUTA, FICA expense accounts.
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