QuickBooks & Turbo Tax - Optimize Your QB Data for Taxes With These 10 Tips - 1

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By Jennifer A. Thieme

If you are interested in using QuickBooks and Turbo Tax, there are some important steps you need to do before filing. Take care of these steps to ensure that your income tax returns are as accurate as possible.

1. Reconcile Accounts. All Balance Sheet accounts in the Chart of Accounts (COA) that can be reconciled should be. Here is a list of some of them:

Checking Accounts
Savings Accounts
Credit Card Accounts
Lines of Credit
Other Loan Accounts, such as Auto Loans

In order to reconcile them, you will need all statements going back to the last time they were reconciled, or the inception of the account.

2. Examine Customer and Vendor Balances. Run aging reports for each of these and see if there are any unapplied credits or payments. Apply them if needed. Follow this path for customers:

Reports > Customers & Receivables > A/R Aging Detail

For Vendors:

Reports > Vendors & Payables > A/P Aging Detail

3. Tax-Line Mapping. QuickBooks and Turbo Tax are a natural combination. This step is what enables you to use the two programs together. Here’s how:

From the Company menu, select Company Information. Select the appropriate Fiscal Year, Tax Year, and Income Tax Form Used.
Go to the COA and enable it so you can view the tax-line mapping for each account. At the bottom of the screen, click the button that says Account. Scroll up and select Customize Columns. There are two sides to this window. You should see Tax Line on the left. Highlight it and click Add. It should now change to the right side. Click Ok.
Back at the COA, you can see which accounts have been assigned, and which accounts have not. To assign them, highlight each account, right click, and select Edit Account. Locate the drop-down box labeled Tax-Line Mapping. Choose the correct tax line for this account.

4. Suspense Account Clean-Up. Sometimes QB users use an account called, “Suspense.” Using an account like this helps people keep their register balances accurate without needing to assign what the transaction was for. This is fine, as long as the transactions get assigned as some point. They need to be assigned before financial data can be imported to Turbo Tax.

This is because there is no corresponding tax line for “Suspense.” If transactions remain in a Suspense account, they will get assigned to a tax line during the tax line mapping process. The transactions will be incorrectly reported if this happens. Make sure it doesn’t and go through the Suspense account, assigning transactions correctly until it has a zero balance.

5. Create and Review Income Tax reports. These reports give you a good picture of your tax situation. Follow this path to run them:

Reports > Accountant & Taxes > Income Tax Preparation
Reports > Accountant & Taxes > Income Tax Summary
Reports > Accountant & Taxes > Income Tax or Detail

Click here for continuation of this article. — Stay Tuned :: Posted tomorrow!

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January 12 2008 09:54 pm | Managing Taxes and Money Management

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