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Friday, May 27, 2005

Where Do You Put a Tax Refund?


I got back a check from the US Treasury for an overpayment of taxes. I don't know how to post it. It is a deposit but against what? It isn't income either. Help.


This is a very common problem. The answer is it depends. First you need to find out what account you put your tax payments into. If they were posted to “Prepaid Income Tax” then you put the refund amount back against that account. More likely though, when you wrote the check to the government, you posted it to some tax expense account. In this case simply put the deposit back into the same expense account reducing your expense. After all it is a refund of that expense.

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