Income Tax Payable

Question

I got income tax refund $100 I posted Dr. 1060 Chequing acct.& cr. 2160 income tax payable but in the financial Balance sheet under income tax payable has a balance $100 which I think should show .00 Do I do instead of put cr 5680 income tax expense

Mi Ling Yiu · Accepted Answer

Method 1 
 I back dated to Oct 18, 2021 the actual entry is dr. bank acct. cr Income Tax payable. Then I change to dr. bank acct. and cr. Income tax expenses. 
 
 Method 2 
 Can I go to General Journal back dated July 31, 2022 (year end) make the adjusted 
 entry dr. Income tax payable cr. Income tax expenses. and it has this warning 
 "The date for this transaction precedes the Fiscal Start date and will affect prior year reports. It will also affect the current year's starting balances. Are you sure you want to continue?' 
 So you think it will not affect the current year's starting balances since is just adjustment with the same amount/figure just put in different entry 5680 instead of 2160 I am scare to click the process so I afraid it will affect the starting balance. Please advise.

DeneshS · Answer

Hi Mi Ling Yiu , 
 Like Alwyn had mentioned in the other post, we highly recommend you speak to a trusted CPA to ensure that you are doing the correct entries and filing. Accounting can be much like an engine not running properly and we need to do a diagnosis on the past history to determine a current fix and we cannot give a single answer based on one scenario. Here are the facts that we do know in your situation: 
 
 You must post a debit to the bank account around the time the deposit was done and the transaction must match that time period. If the deposit occurred in 2021, keep the transaction in this period otherwise, the bank reconciliation will not match. 
 Sage 50 will not allow you to post to 2020 or 2018 and you should not need to do this anyway otherwise you would be ruining the tax filing. Liability accounts accrue their balance year over year and this is the reason why you may not need to go back to 2018 or 2020 to make any changes. 
 You may not need to post directly to the retained earnings account because posting to the expense account is directly related to current earnings and eventually retained earnings. A negative expense sounds good but only if you already booked the expense in the past. If you are offsetting past year expenses, a negative expense is good because the account was a positive in the past (if that is the case). 
 You need to have someone look at the full history of the General Ledger to see the full picture. 
 
 Given what you have told us, we suggest you take these findings to an expert in an effort to avoid tax filing issues that can cause headaches down the road. Trust that this direction suits you well.

DeneshS · Answer

Hi Mi Ling Yiu , 
 You seem to be on the right track as long as you originally booked the debit on the 5680 income tax expense account. I would advise to verify with an accountant on this transaction before filing your taxes. This document is handy in handling debits and credits. Hope this helps.

DeneshS · Answer

Correct. Click yes to continue as long as you did not file 2021 yet.

Sage 50 Canada

Income Tax Payable

Top Replies

COMMUNITY

COMPANY

PARTNERS

SUPPORT & TRAINING