TurboTax FAQ
TurboTax FAQ
5 people found this useful

How do I reconcile my balance sheet in TurboTax?

If the income or earnings you entered differ from what's on your books, TurboTax Business will display a Not Reconciled screen. To reconcile:

  1. Click the Federal Taxes tab, and then click Balance Sheet right below it.
  2. You should now be on the Your Balance Sheet summary screen.
  3. Click Edit or Start to update existing accounts or enter new ones, respectively. Make sure your entries match the amounts in your books.

Here are some tips:

  • Check that all amounts were entered correctly into TurboTax Business.
  • All amounts should be entered as positive unless your balance sheet balance has an uncharacteristic negative balance, for example a cash overdraft or an overpaid amount on an account payable.
    • If you paid an amount on an account payable that was more than the invoice, you might have a negative amount in your liabilities.
    • Or, previous losses in your retained earnings larger than any profit would be entered as negative retained earnings.
  • Make sure your previously prepared balance sheet is in balance! Check for bookkeeping errors, and make sure that Assets = Liabilities + Equity.
    • If you have a prepared balance sheet from your records, the amounts entered in TurboTax Business should not be different than those on the prepared record.
    • Book profit or loss for the period should be added to retained earnings.
  • If you imported your balance sheet data from QuickBooks, confirm that all amounts imported correctly and that no information is duplicated or missing. If necessary, adjust balances.
    • Depreciation does not import from QuickBooks. Oftentimes tax depreciation (as computed by TurboTax Business) is booked to QuickBooks by the business.
  • To see what's on a particular line (or to correct it), you can view or adjust the line item in Forms mode

Creating a new balance sheet for your tax return?

You may need professional guidance to recreate a prior- or current-year balance sheet if your business's records are incomplete or missing.

  • Beginning balances are found on your previous year's tax return as ending balances. Beginning with previous year's balances, add or subtract business activity to reflect current year's ending balances.
  • Prepare a cash flow statement that accurately reflects increases and decreases to balance sheet accounts.
  • Make sure all assets are listed at their basis (or book balance) amount. Beginning and ending inventory flow from the appropriate lines of the Cost of Goods Sold section of Schedule A.
  • Appropriate records must be kept supporting accumulated depreciation (i.e. depreciation claimed in prior years) on depreciable assets. Previous years' accumulated depreciation plus current year's depreciation expense are added together to get the ending accumulated depreciation amount.
  • Retained earnings amounts should include current year's book income or loss.