| If you are interested in using QuickBooks and Turbo | | | | - From the Edit menu, select Preferences. |
| Tax, there are some important steps you need to do | | | | - Select the Tax:1099 preference. |
| before filing. Take care of these steps to ensure that | | | | - Click the Company Preferences tab. |
| your income tax returns are as accurate as possible. | | | | - Where it says, "Do you file 1099-MISC forms," select |
| 1. Reconcile Accounts. All Balance Sheet accounts in | | | | Yes. |
| the Chart of Accounts (COA) that can be reconciled | | | | - In the Account column, select the account where the |
| should be. Here is a list of some of them: | | | | payments were posted for each type of 1099 |
| - Checking Accounts | | | | category. If there is more than one, then select "Multiple |
| - Savings Accounts | | | | Accounts," and place a checkmark next to each. |
| - Credit Card Accounts | | | | Since most QuickBooks users will only use Box |
| - Lines of Credit | | | | 7:Nonemployee Compensation, this is probably the only |
| - Other Loan Accounts, such as Auto Loans | | | | 1099 Category you need to make an entry for. |
| In order to reconcile them, you will need all statements | | | | Run 1099 reports to make sure the data is correct: |
| going back to the last time they were reconciled, or | | | | Reports > Vendors > 1099 Summary |
| the inception of the account. | | | | If you see a column called "Uncategorized," this means |
| 2. Examine Customer and Vendor Balances. Run aging | | | | that the vendor was marked as a 1099 vendor in the |
| reports for each of these and see if there are any | | | | vendor setup screen, but the account his payment |
| unapplied credits or payments. Apply them if needed. | | | | posted to is not selected in the Preferences |
| Follow this path for customers: | | | | instructions above. Go to the vendor bill, determine |
| Reports > Customers & Receivables > A/R | | | | which account his payment posted to, and go back to |
| Aging Detail | | | | the 1099 preferences and add that account as shown |
| For Vendors: | | | | above. |
| Reports > Vendors & Payables > A/P Aging | | | | Print your 1099s and give them to your vendors by |
| Detail | | | | January 31. Print the 1096 and mail it by February 28. |
| 3. Tax-Line Mapping. QuickBooks and Turbo Tax are | | | | 7. Close the Books. If you don't close the books on a |
| a natural combination. This step is what enables you to | | | | regular basis, close them once the tax return has been |
| use the two programs together. Here's how: | | | | prepared. You will need Admin access to do this. |
| - From the Company menu, select Company | | | | Here's how: |
| Information. Select the appropriate Fiscal Year, Tax | | | | - From the Edit menu, select Preferences. |
| Year, and Income Tax Form Used. | | | | - Select the Accounting preference. |
| - Go to the COA and enable it so you can view the | | | | - Click the Company Preferences tab. |
| tax-line mapping for each account. At the bottom of | | | | - The bottom area says Set Closing Date. Click the |
| the screen, click the button that says Account. Scroll | | | | Set Date/Password button. |
| up and select Customize Columns. There are two | | | | - In the Date area, select the last day of the tax year |
| sides to this window. You should see Tax Line on the | | | | for the return you just completed. For most people this |
| left. Highlight it and click Add. It should now change to | | | | will be 12/31 of the prior year. |
| the right side. Click Ok. | | | | - Set a closing date password. |
| - Back at the COA, you can see which accounts have | | | | Closing the books ensures that prior data is not altered. |
| been assigned, and which accounts have not. To | | | | This is important, since the tax return is based on that |
| assign them, highlight each account, right click, and | | | | data. If you get audited, you want to make sure that |
| select Edit Account. Locate the drop-down box | | | | your QuickBooks data matches the tax return. Do this |
| labeled Tax-Line Mapping. Choose the correct tax line | | | | by closing the books. |
| for this account. | | | | 8. Purchase a Turbo Tax desktop version. Be sure to |
| 4. Suspense Account Clean-Up. Sometimes QB users | | | | purchase the right version of Turbo Tax. |
| use an account called, "Suspense." Using an account | | | | - Sole Proprietors and single member LLCs should buy |
| like this helps people keep their register balances | | | | Turbo Tax Home & Business. |
| accurate without needing to assign what the | | | | - S Corps, Partnerships, multi-owner LLCs, or C Corps |
| transaction was for. This is fine, as long as the | | | | should buy Turbo Tax Business. |
| transactions get assigned as some point. They need | | | | - QuickBooks cannot be imported into Turbo Tax for |
| to be assigned before financial data can be imported | | | | Mac or Turbo Tax Online. |
| to Turbo Tax. | | | | - Older versions of QB cannot be imported. |
| This is because there is no corresponding tax line for | | | | 9. Consider the potential disadvantages of doing your |
| "Suspense." If transactions remain in a Suspense | | | | own taxes. It's true that many people can do their own |
| account, they will get assigned to a tax line during the | | | | taxes just fine. But many others cannot. I've seen too |
| tax line mapping process. The transactions will be | | | | many incorrect returns in my practice to say, |
| incorrectly reported if this happens. Make sure it | | | | "Everybody can do it!" Be sure you are one of the |
| doesn't and go through the Suspense account, | | | | ones who really can. An honest self-assessment is |
| assigning transactions correctly until it has a zero | | | | important! |
| balance. | | | | - Are you good with numbers? "Numbers" people are |
| 5. Create and Review Income Tax reports. These | | | | naturally better at this type of task. |
| reports give you a good picture of your tax situation. | | | | - Do you mind research? Sometimes preparing a tax |
| Follow this path to run them: | | | | return requires tax research. Some people don't mind |
| - Reports > Accountant & Taxes > Income | | | | this, but others do. |
| Tax Preparation | | | | - Did you have your return professionally prepared in |
| - Reports > Accountant & Taxes > Income | | | | the last two years or so? You can use it as a guide if |
| Tax Summary | | | | your tax situation has not changed. |
| - Reports > Accountant & Taxes > Income | | | | 10. Get another set of eyes. If you decide to prepare |
| Tax or Detail | | | | your own return, consider having a tax professional |
| 6. 1099 Preparation. This isn't a QuickBooks and Turbo | | | | look it over before you file. The small fee may help |
| Tax issue, but still applies since it's for a similar time of | | | | you sleep better at night. |
| year. Get it set up the right way: | | | | |