QuickBooks & Turbo Tax - Optimize Your QB Data for Taxes With These 10 Tips - 2

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Continuation of part 1 of the article:

6. 1099 Preparation. This isn’t a QuickBooks and Turbo Tax issue, but still applies since it’s for a similar time of year. Get it set up the right way:

From the Edit menu, select Preferences.
Select the Tax:1099 preference.
Click the Company Preferences tab.
Where it says, “Do you file 1099-MISC forms,” select Yes.
In the Account column, select the account where the payments were posted for each type of 1099 category. If there is more than one, then select “Multiple Accounts,” and place a checkmark next to each.

Since most QuickBooks users will only use Box 7:Nonemployee Compensation, this is probably the only 1099 Category you need to make an entry for.

Run 1099 reports to make sure the data is correct:

Reports > Vendors > 1099 Summary

If you see a column called “Uncategorized,” this means that the vendor was marked as a 1099 vendor in the vendor setup screen, but the account his payment posted to is not selected in the Preferences instructions above. Go to the vendor bill, determine which account his payment posted to, and go back to the 1099 preferences and add that account as shown above.

Print your 1099s and give them to your vendors by January 31. Print the 1096 and mail it by February 28.

7. Close the Books. If you don’t close the books on a regular basis, close them once the tax return has been prepared. You will need Admin access to do this. Here’s how:

From the Edit menu, select Preferences.
Select the Accounting preference.
Click the Company Preferences tab.
The bottom area says Set Closing Date. Click the Set Date/Password button.
In the Date area, select the last day of the tax year for the return you just completed. For most people this will be 12/31 of the prior year.
Set a closing date password.

Closing the books ensures that prior data is not altered. This is important, since the tax return is based on that data. If you get audited, you want to make sure that your QuickBooks data matches the tax return. Do this by closing the books.

8. Purchase a Turbo Tax desktop version. Be sure to purchase the right version of Turbo Tax.

Sole Proprietors and single member LLCs should buy Turbo Tax Home & Business.
S Corps, Partnerships, multi-owner LLCs, or C Corps should buy Turbo Tax Business.
QuickBooks cannot be imported into Turbo Tax for Mac or Turbo Tax Online.
Older versions of QB cannot be imported.

9. Consider the potential disadvantages of doing your own taxes. It’s true that many people can do their own taxes just fine. But many others cannot. I’ve seen too many incorrect returns in my practice to say, “Everybody can do it!” Be sure you are one of the ones who really can. An honest self-assessment is important!

Are you good with numbers? “Numbers” people are naturally better at this type of task.
Do you mind research? Sometimes preparing a tax return requires tax research. Some people don’t mind this, but others do.
Did you have your return professionally prepared in the last two years or so? You can use it as a guide if your tax situation has not changed.

10. Get another set of eyes. If you decide to prepare your own return, consider having a tax professional look it over before you file. The small fee may help you sleep better at night.

This QuickBooks and Turbo Tax article is brought to you by Jennifer A. Thieme. She’s is a Certified QuickBooks ProAdvisor and a Registered Tax Preparer in California. Visit http://www.jenniferthieme.com for relevant, unique, and personal QuickBooks Help.

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January 13 2008 09:51 pm | Managing Taxes and Money Management

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