Here are some questions and answers about QuickBooks and Turbo Tax. These questions apply to any tax program, and even when you have a tax professional do your return.
I read elsewhere that I need to reconcile all accounts before using Turbo Tax. Why is this?
Reconciling accounts is important because it ensures that all entries for the balance sheet on your tax return have been verified and entered correctly. If you need help reconciling, click here for instructions.
You mention that we need to examine customer and vendor balances before using Turbo Tax. Why?
This is similar to above. This step ensures that your Accounts Receivable and Accounts Payable have accurate balances for your balance sheet on the tax return.
I don’t understand tax line mapping. What does it do?
This is the actual process that enables QB and TT to work together. It ensures that all accounts in the Chart of Accounts will point to the correct line of the tax return in Turbo Tax.
I have a large balance in my Suspense account. Do I really need to get it categorized before using Turbo Tax?
Yes. All transactions in the Suspense account are for something. If they don’t get assigned correctly (bringing the Suspense account to a zero balance), then the Suspense account will get assigned a tax line during the tax line mapping process. Since there is no corresponding tax line for Suspense
on a tax return, these transactions will be incorrectly reported. Avoid this and make sure the Suspense account is cleaned up before importing to Turbo Tax.
Please explain the Income Tax reports in QB.
These reports help make sure the tax line mapping was correct, and also give you a snap shot of the return. The Detailed report gives the detail from the Summary report. Run all three to make sure things look right before importing to Turbo Tax.
What is the advantage of preparing 1099s in QB?
Once it’s set up, it’s a nice feature. You don’t need to wait for an outside service to do it, meaning if you are prepared and have all the forms, you can take care of your 1099s in early January (assuming your books are closed for the prior year). Get the forms directly from Intuit – they are guaranteed to work.
Do we really need to close the books and set a password after using TT? I’ve never done this before.
Absolutely! Setting a closing date and password prevents prior data from being changed, and this is important since the tax return was based on that data. If you get audited, you want to be sure that your QuickBooks file matches closely to the tax return.
What is the advantage of using QuickBooks and Turbo Tax together?
If you like to do your own taxes, then QB is a natural fit with Turbo Tax. Importing data is quicker and more accurate than entering it by hand. However, I suggest that you have the return reviewd by a tax professional before filing it. I’ve seen a lot of mistakes made by people who prepared their own returns.
Which version of Turbo Tax should I get?
- If you use QB Online or QB for Mac, they are not supported for Turbo Tax import
- Get Turbo Tax Personal & Business if you are a Sole-Proprietor (Schedule C)
- Get Turbo Tax Business if you have an s or c corp, a multi-member llc, or a partnership