Prepaid Taxes

Hello, missmissySEI.

Thank you for reaching out to the Community. I'm here to help you offset the money your accountant applied for last year.

Yes, you're correct. You need to create a Journal entry to offset the money involved. Journal entries are used to keep track of all the financial transactions a company makes, and they are essential for accurate financial reporting and analysis. Each journal entry affects at least two accounts and follows the double-entry accounting principle, which means that for every debit entry, there must be an equal credit entry.

Here's how:

1. Open QuickBooks Desktop and go to the Company menu.
2. Select Make General Journal Entries.
3. Fill in the date, entry number, and any other necessary fields.
4. Debit or credit the appropriate accounts and enter the amounts.
5. Click Save & Close when you're done.

I recommend contacting your accountant to ensure you're using the correct account. Your accountant will be able to provide you with detailed advice on which account is best for your specific needs. They can also help you set up the account correctly, ensuring you have all the necessary documentation and information. Your accountant will also be able to answer any questions about managing your finances and provide guidance on making the most of your account. By working with your accountant, you can be confident that your finances are being managed best for your business or personal needs.

Furthermore, if you need tips about sales tax adjustment in QuickBooks Desktop (QBDT), you may check this article: Set up sales tax in QuickBooks Desktop.

You can always return to the Community if you need further help recording JE transactions. I'm always here to lend a hand. Have a great day, and take care!

@missmissySEI 

I'm assuming this is a sole proprietorship.  Estimated tax payments are a personal expense, not a business expense.  Therefore, prepaid taxes should not be listed in your chart of accounts at all.  Any payment made to you personally to pay your estimated taxes should be assigned to your Owner's Capital (or Owner's Draw) equity account.  The only entry that should be on your books is a debit to Owner's Capital (or Owner's Draw) and a credit to your bank account.  That can be done by writing a check and assigning Owner's Capital (or Owner's Draw) to the check.  In this case, I would suggest changing the 2022 entries that were posted to prepaid taxes by changing the account to Owner's Capital (or Owner's Draw), even though your 2022 books are closed.