Journal entry re income tax due

[PeterC]

Finalising my year end accounts, I want to put in a journal entry for IT due, I am assuming I credit IT due under current liabilities and debit ????

I am using Quickbooks.


Thanks

 

[Brendan Burgess]

You should debit a tax charge account, just like any other expense.

Brendan

 

[PeterC]

Thanks.

I assume I add it as an expense to my P&L and then add it back when I am doing my tax comp to get the adjusted profit?

 

[ubiquitous]

Best to leave it outside the P&L altogether & post to drawings instead.

 

[PeterC]

I am filling my IT return and see the spot for taxes due, I am ok with the VAT, that is reconciled, but I credit in an amount for IT due under current tax liabilities in my taxes due, but do I credit my drawings?


Thanks

 

[TripleA]

Finalising my year end accounts, I want to put in a journal entry for IT due, I am assuming I credit IT due under current liabilities and debit ????

I am using Quickbooks.


Thanks

I wouldn't journal this in at all as there is no P&L deuction for this. When you pay the Income Tax bill then it will go to Drawings.

DB Drawings
CR Bank (if paid from business account)

 

[PeterC]

I wouldn't journal this in at all as there is no P&L deuction for this. When you pay the Income Tax bill then it will go to Drawings.

DB Drawings
CR Bank (if paid from business account)

Thanks,

Revenue require an amount in the summaried tax return for VAT / PAYE / IT owing at accounting year end. In order for me to keep meet their requirements, they need to know what IT is owing for for my accounts for 2006, that is why I need to know the entries for this, drawings should not include pension or IT in the figure as per Revenue.

I hope I makes sense!

 

[ubiquitous]

Thanks,

Revenue require an amount in the summaried tax return for VAT / PAYE / IT owing at accounting year end. In order for me to keep meet their requirements, they need to know what IT is owing for for my accounts for 2006, that is why I need to know the entries for this, drawings should not include pension or IT in the figure as per Revenue.

I hope I makes sense!

The normal convention is to exclude personal tax liabilities from accounts (ie not recognising same as a balance sheet item) and to account for income tax payments as drawings. If the Balance Sheet is calculated at year-end without reference to income tax liabilities, then it is fine to extract the "taxes owing" figure per the balance sheet from the accounts without adjusting for any income tax amount owing.

 

[PeterC]

Thanks for all the help!