How do I assign US Schedule C tax categories to transactions?

[J. Alex Aycinena]

Leslie,

> ---------- Forwarded message ----------
> From: Leslie Hendelman <lesliehendelman at gmail.com>
> To: gnucash-user at gnucash.org
> Date: Mon, 2 May 2011 00:36:34 -0400
> Subject: How do I assign US Schedule C tax categories to transactions?

To get terminology right and avoid misunderstandings - you don't
assign tax categories to transactions but rather to accounts
(Edit->Tax Options); then splits within transactions that are assigned
to those accounts are included in the US Income Tax Report.

> I am new to Gnucash, and open source software in general, and cannot
> understand the instructions for assigning tax categories to an account, for
> example, a bank account that handles all income and expenses for my
> business, is now listed as a "bank account" - and cannot be assigned tax
> categories, apparently.  What am I doing wrong?
> thanks
>
>

While there are some balance sheet accounts that can be assigned to US
Income Tax categories, the vast majority of the accounts that would be
assigned to tax categories are income/expense type. For your Schedule
C business, you would have income/expense accounts that would
correspond to the line items on Schedule C (or several accounts for
each Schedule C line item if you needed it). For example, Schedule C,
line 1, is "Gross receipts or sales". You would have one or more
income accounts that correspond to this and each would be assigned
this tax category. Likewise for Schedule C, line 15, "Insurance (other
than health)". Then when you entered transactions into your business
bank account, the splits in those transactions charged to those
specific accounts would show up on the report under those tax schedule
lines.

Does this clarify things for you?

Alex