Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
AlliedACQ
Returning Member

increase in accrued expenses this yar compared to last

My LLC filing as a C Corp accrued expenses in 2019 is higher than the accrued expenses at the end of 2018.  Shouldn't the difference be a deduction on my 2019 filing ?

I didn't know how to make this happen, so I added a Misc expense for the difference.  What is the right way to do this ?

I also still put the beginning and end of year accrued expenses on the balance sheet

 

Stu

4 Replies
tagteam
Level 15

increase in accrued expenses this yar compared to last

It is not exactly clear as to what occurred and how you are handling (or attempting to handle) this issue.

 

Regardless, if the corporation had an NOL for 2018, you would enter that figure under Federal Taxes>>Deductions>>Net operating loss (NOL) carryover.

AlliedACQ
Returning Member

increase in accrued expenses this yar compared to last

I am ot sure how NOL would apply to my question.  Assume no NOL last year, $50000 in accrued expenses per balance sheet on my 2018 tax return.  $100000 per balance sheet on the 2019 balance sheet for the 2019 return.  How do I put the $50K  increase on the 2019 deductions ?  I cant list the full $100K as commom business expense, because that wouldnt handle the fact that I started the 2019 year with $50K in soon to be paid expenses from 2018

qbteachmt
Returning Member

increase in accrued expenses this yar compared to last

See if this helps:

 

Accrued unpaid bills is not the same as accrued expense. And it's not Misc; it's whatever you owe for. Example:

Accrual basis, and you have $50,000 carryover. That won't be part of the 2019 Expense reporting. That is liability reporting.

Accrual basis, and you have $10,000 of unpaid product delivered; that is $10,000 new asset, offsetting the additional $10,000 liability (what you owe to others). Not expense and not misc.

Accrual basis, and you have $1,000 per month unpaid rent. That is Rent Expense as new expense accrual of $12,000. Now we are up to $22,000 new amounts owed, but only $12,000 is seen as Business expense.

 

Compare your two prior years, to understand how this applies to your operations.

DavidS127
Expert Alumni

increase in accrued expenses this yar compared to last

If you are using accrual basis accounting for taxes, and the accounting is correct, the accrued expenses are already in your accounting expenses, and you don’t have to add them in again.

 

In other words, at the end of 2018, you had recognized $50,000 of expenses your business had “incurred” but not yet paid.  The prior entries, if correct, would have been to put $50,000 somewhere in business expenses (profit and loss account) and put that same $50,000 in accrued expenses payable (balance sheet account).  Under “accrual basis for taxes” you would have deducted the $50,000 in the year it was accrued (“incurred”).  Note that if you were on “cash basis for taxes” you would not have deducted the $50,000 because it had not yet been paid.

 

Between 2018 and 2019 the accrued expense (balance sheet account) increased to $100,000.  Either you didn’t pay the 2018 $50K and accrued $50K more in 2019, or you paid the $50K and then accrued another $100K in 2019, or some combination of that.  Once again, if using accrual basis for taxes the accrued expense is already in your accounting expenses and you do not add it in again.  For cash basis, you would identify which accrued expenses were actually paid in 2019, and that is the deduction.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

About Community

Learn about taxes, budgeting, saving, borrowing, reducing debt, investing, and planning for retirement.

3.48m
Members

2.6m
Discussions

Manage cookies
v