1) why are fed income taxes paid not a reduction of net income in Turbo Tax? 2) Why is my balance sheet retained earnings is off by the exact amount of Fed tax deposited?

[Kozyt]

Form 1120 : Income = 4,004,876 : Expenses =1,595,901 ; Net Income = 2,408,975
Tax=544,375 But retained earnings = 2,408,975. Why are not the federal taxes subtracted from something? (fed tax deposits = 565,000)

[Critter-3]

If your business has more than 4 million in income you can afford to use a paid tax pro so the TT Business program has the option to upgrade for professional assistance ... please use that option since most users on this forum will not be able to help you with a Corporate return.  

[Kozyt]

You are correct - I asked a Tax Professional and they said "That's why tax professionals don't use Turbo Tax".

[Critter-3]

Ok ... I am confused.   If you need to make an overriding entry in the forms mode then do so.   If you don't know what you are doing employ a professional.  This year the TT Business program has the option to upgrade to live help if you wish  OR   seek an outside professional to get the return completed.  

[Kozyt]

It doesn't matter if I made $10.00 and paid $1.00 in income tax, the Turbo Tax balance sheet would still be off because it is not reducing the net income by the $1.00 before it adds the net income to the retained earnings.  Since Turbo Tax calculates the income tax it should automatically reduce the net income by the amount of tax paid. Then the excess amount of taxes deposited should be put into an asset account of prepaid taxes for next year.  Sure I can do a [Ctrl + D] and do an override to net income, but why should I have to do that?

[Wes S2]

I have the same question, and my corporate income is considerably less, but apparently this "support" coty balance sheet is out of balance by the amount of federal income taxes paid for last year and pre-paid for this year.  Obviously, TurboTax already knows I paid federal income taxes based on entries in other parts of the program, but it just keeps saying I am out of balance.  Federal Taxes are not tax deductible, but TurboTax offers no way to account for them on the Balance Sheet.  Does any helpful person or preferably TurboTax have an answer to a question that I would guess most people who purchase TurboTax for Business has this same problem.

[DaveF1006]

You can make an adjustment on Schedule L.  Go to the forms mode in  your TurboTax program, then look for Form 1120 (pgs 3-5). Scroll to Schedule L and make the adjustment either in cash or retained earnings depending on which side of the balance sheet is out of balance.