1120 C Corp - Balance Sheet / Prior Year Federal Tax Payment Handling

[mass2022]

The C Corp paid $10,241 from their bank account last year (2021) to federal income taxes due in 2021.  (These are not estimated payments).

When completing the 1120 balance sheet section, the Asset section is lower by the $10,241 vs. the Liabilities & Equity Section.  (Due to the bank balance paying the taxes).

On TurboTax's data entry screen, I'm not readily able to see where to account for this payment on the Liabilities & Equity side.  Any help is most appreciated!

[Anonymous_]

Other liabilities (which could be labeled "income tax expense").

[MinhT1]

The amount of tax paid should be subtracted from line 25 - Retained earnings -  Unappropriated. That would balance your balance sheet.

[mass2022]

Yes - I understand this needs to be lowered.

However - what DATA ENTRY SCREEN in TurboTax Business permits me to lower this?

In the Balance Sheet Tab of the Data entry wizard, any numbers added to:

a) "Adjustments to Shareholder's Equity" is reported on Line 24.

b) "Appropriated Retained Earnings" is reported on Line 26.

c) Where is the data entry to modify line 25???

- Perhaps I'm missing this, but it doesn't seem to exist?

[Anonymous_ · Accepted solution]

Use Forms Mode and open your 1120-S (pg3-5). Scroll down to Schedule L.

[mass2022]

Thank you!  

I just overrode the field by right clicking, override.  For anyone else who needs it.

[mass2022]

So my M-2 is now off by the same amount.

Do I need to form override and add:

Schedule M-2, #6 Other Decreases, the $10,241 federal income taxes?

[MaryWenaas]

I have $1,394 on page 6 line 26 retained earnings-Appropriated on my 2021 bus. tax return. This is throwing my balance sheet off and I have no idea where it came from or how to balance this?

[AbrahamT]

It sounds like we need more information from you to verify the cause. A full picture of what your balance sheet looks like will help clarify the question better. What other figures are showing up on this balance sheet. For example, what does your unappropriated retained earnings figure look like. Is there anywhere in the input that you appropriated funds to a certain project and you didn't record the other side of the entry. We need more information to help clarify this further. 

[Wes S2]

This solution does not work.  It just throws something else out of balance. The only choice seems to be to make federal taxes paid part of retained earnings, which makes absolutely no sense.  The program is truly terrible.  By the way, my corporation is subchapter S, not subchapter C, but the problem is the same.  TurboTax does not account for federal taxes paid impacting retained earnings. It is a major flaw in the program. 

[RobertB4444]

Your retained earnings should be reduced by the taxes paid.  You didn't get to keep the earnings that you spent on taxes.  So they a re no longer retained.  That offsets the reduction in the bank balance.  

@Wes S2 

[Sugar69]

It's not the program, it's the tax law.  You just need a better understanding as to how the tax law works and then you will understand why it gets posted the way it does.