ThomasM125
Expert Alumni

Business & farm

If you right click on the retained earnings number in TurboTax you should see a Data Source option which will tell you where that number comes from. Most likely, it comes from the schedule M-2 which is further down on the page. The M-2 balance at end of year is a product of many items, and starts with the ending balance from the previous year. You need to look at those numbers and make corrections to bring the balance in line with your QuickBooks numbers.

 

Sometimes, your QuickBooks income is stated on an accrual basis and your tax return is stated on a cash basis, which will throw your retained earnings off. If so, you can make an adjusting entry on schedule M-2 to account for that.

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