Dating US Tax Payments

Allen Ziegenfus listmail at allenz.net
Tue Apr 6 22:04:06 EDT 2004


On Sun, 04 Apr 2004 20:17:13 -0500
"T. Cabugao" <tycabugao at earthlink.net> wrote:

> Here's how I have set up my accounts:
> 
> Asset: Tax Refund
> 
> Liability: Taxes Due
> 
> Expense: Tax
> 
> In Jan-April, once I figure out my tax refund/taxes due, I make an
> entry for Dec 31 (tax year) to either the asset or liability account.
> 
> In case of a refund, I debit Asset:Tax Refund and credit my Expenses: 
> Tax account for Dec 31st. This lowers my Tax expenses for the tax
> year, and adds to my asset. Once I receive the refund check from the
> IRS, I debit my Checking account and credit my Asset: Tax Refund to
> complete the transaction.
> 
> In case of having taxes due for the prior tax year, I credit my 
> Liability: Taxes Due account, and debit my Expense: Tax account, with
> a date of Dec. 31st. This increases my Tax expenses for that year and 
> increases a liability account that I can zero out once I mail the IRS
> my check.
> 
> You can use these Asset and Liability accounts year after year.
> 

I see that this way of doing things works and I've changed over my
accounts to work this way. However, changing the dates doesn't seem
like an ideal solution. The dates are significant for several reasons
I've found:

	(1) If estimated tax payments are late and a penalty needs to be
computed
	(2) When you pay your state estimated tax affects when  you can deduct
it. 

Of course you can just add the date of the actual transaction in the
description. But I was wondering -- has there been any thought towards
adding a"tax year" attribute on each transaction or a similar concept?
Maybe that would just make things more confusing. 

I wonder how other accounting packages address this. 

Allen

-- 


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