topic refunded prepayment entry in Business & farm

refunded prepayment entry

ERAJ — Tue, 24 Feb 2026 03:46:39 GMT

In 2022 we refunded a substantial prepayment to a client (for a cancelled wedding). That prepayment was reported as income in 2021 (although we probably should have not reported it as income). Where do we enter it as a reduction of income for 2022?

Re: refunded prepayment entry

MonikaK1 — Sat, 04 Mar 2023 18:59:16 GMT

In TurboTax, you can enter the amount of a refund of money previously included as income by going to the Income section of your Schedule C activity, then:

In the Income section, select Add income for this work
From the list that appears, select Rebates and Refunds under Less Common Income
Enter a description and enter the dollar amount as a positive figure.

See also this help article for more information regarding self-employment income and expenses.

Re: refunded prepayment entry

Carl — Sat, 04 Mar 2023 20:33:10 GMT

Depending on the version of TTX you are using, the section could be called "Rebates and Refunds" or "Returns and Allowances". Both mean the same thing.