I am sure you must have gone through the phase wherein you overpaid your taxes and now received a refund. And I am sure that you are still facing the same issue that’s why you have landed on this page to check out how to record them within QuickBooks. When you enter the refund within the program correctly then it automatically corrects your liabilities side of the balance sheet.
Process to Record Tax Refunds in QuickBooks
- Within your QuickBooks, click over employees tab. This you can find on the header of the software.
- Click to choose Payroll liabilities and then navigate to the “Refund of liabilities” tab.
- Here a new window will appear. Choose the vendors tab to access the drop down list.
- From the list provided, you would now need to click on the name of the vendor, who did a refund to you.
- A set of prompts will appear; first you will have to enter the refund date. Please note: the date entered will directly affect your balances in bank.
- Under the Period ending date, enter the date that will affect the refund. This can be explained like: If for e.g. you have a received a refund on 29 April and the period is ending on 30th June then your pay period ending date would be 30th June.
- In the next screen, you will see an option wherein you will be asked if you want to group this item/refund with other payments.
- You can also select the option to directly affect the refund on your bank balance.
- From here on, all the other set of prompts will be self explanatory like:
- Name of the payroll item against which you received the refund.
- Enter the amount of the refund in the amount field.
- Under the Memo option, you can write a short note on what behalf you received the refund. This will not only help you remember the reason on why you received the refund but will also help you easily filter out the transactions that are affected by this refund.
- If you have refund for other items then enter those items as well.
- Hit OK.
Now here is what happens, when your taxes are overpaid then your balances on the liabilities side decline. When you record the refund then the software raises up your liabilities and your balance on both the asset and the liabilities side matches.
Hope now you had clarity over how to record your tax refunds within the program. But if you demand any further help then do get in touch with Askforaccounting.com. You can also talk to our QuickBooks ProAdvisor and get immediate help.