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Use tax lines for accounts

An account's tax line associates each income and expense account with the appropriate tax form and line on your company income tax return. You'll see tax lines for the tax form you choose and for schedules and other forms typically filed with that tax form. This makes preparing income taxes easier and quicker, because it enables you to create tax reports to assist your accountant or to export and import your tax data into ProSeries, TurboTax, TurboTax Business, or Lacerte tax programs.

What are the benefits of associating a tax line with each account?

Associating a tax line with each account lets you:

  • Import tax data into our TurboTax or ProSeries tax products.

  • Create tax reports in QuickBooks that help you prepare tax forms. The reports show the amounts to fill in for each tax line on the tax forms.

Choose the tax line on which you would report the income or expenses tracked by this account. For example, if the account tracks your automobile expenses, you would choose "Schedule C: Car and truck expenses." If you are not sure which tax line to choose for this account, check with your accountant.

To add a tax line to an account

  1. Go to the Lists menu and click Chart of Accounts. Shortcut

  2. Select the account to which you want to add a tax line.

  3. Click Account at the bottom of the list and then click Edit Account.

  4. Click the Tax Line drop-down list and choose the appropriate tax line where this account should be recorded.

    If a tax line already appears in the Tax Line field, QuickBooks has automatically preassigned the correct tax line for you. The type of tax form you chose in the Company Information window determines which tax lines appear in the Tax Line drop-down list. You'll see tax lines for the tax form you chose and for schedules and other forms typically filed with that tax form.
    Example

    For example, if you are a sole proprietor of a business and you file Schedule C: Profit and Loss From Business, this tax form has lines such as:

    • Gross receipts or sales

    • Advertising

    • Repairs and Maintenance

    • Other business expenses

    If you have a main revenue or sales account, choose the "Sch C: Gross receipts or sales" tax line. If you have an account for repairs and maintenance, choose the tax line "Sch C: Repairs and Maintenance." Expense accounts for which you don't find an exact match can be assigned to the "Sch C: Other Business Expenses" tax line.

    If you are unsure which tax line to choose for an account, keep in mind that the tax lines closely approximate categories that most businesses would use. Examine the total list to find the closest match available. If you are still not sure which tax line to choose for an account, ask your accountant.

    Note: To disassociate a tax line from an account, select Unassigned.

    What if the Tax Line field isn't there?

    During the Easy Step Interview, if you selected Other / None on the How is your company organized screen, the Tax Line drop-down list will not appear when you add a new account (or edit an existing one).

    To add the Tax Line drop-down list to account setup

    1. Go to the Company menu and then click Company Information.

    2. In the Report Information section of the window, click the Income Tax Form Used drop-down list and choose the income tax form that is used by your company.

    3. Click OK.

    A Tax Line drop-down list of forms and schedules will now be available when you're adding or editing accounts. The Tax Line drop-down list will appear for all new accounts you add, but will not automatically be added to existing accounts. However, you can easily edit your existing accounts to manually assign tax form lines to them.

  5. Click OK

Tables showing general tax line categories for several business types

Tables showing general tax line categories for several business types.

Sole Proprietors

Sch C

Trade or business income and expenses

Sch E

Rental income and expenses

Sch F

Farm income and expenses

Form 4835

Farm Rental income and expenses

Form 1040

Other income; Estimated taxes paid; IRA/SIMPLE contributions; SEP/Keogh deductions

Sch B

Interest and dividends earned on business accounts

Schedule K-1P

Distributions from partnerships

C-Corporations

Income

Trade or business income

Deductions

Trade or business expenses

COGS

Cost of goods sold

Dividends

Distribution of profits to shareholders

B/S Assets

Balance Sheet Assets

B/S Liabilities

Balance Sheet Liabilities

Schedule M-1/M-2

Accounts used to reconcile the company's books and the tax return

S-Corporations and Partnerships

Income

Trade or business income

Deductions

Trade or business expenses

COGS

Cost of goods sold

Sch K: Portfolio Inc

Items that are separately reported to each partner or shareholder. These items are not included in the trade or business.

B/S Assets

Balance Sheet Assets

B/S Liabilities

Balance Sheet Liabilities

Schedule M-1/M-2

Accounts used to reconcile the company's books and the tax return

Fm 8825 A-D

Rental Real Estate property income and expenses

See also

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