How do I handle federal tax refund applied to next year's estimated tax?

Bobbo

Applying my federal tax refund to next year's estimated tax is the only tax transaction that I cannot figure out to handle in Quicken. Any suggestions?

Tom Young

Here's how I've set up things in my file: I have a top-level "Federal Tax" Category with three sub-Categories: Estimates, Income Tax Return, Withholding. Nothing gets entered into that top-level Federal Tax Category, everything gets entered in one or the other of the sub-Categories.

In the case of a refund on the income tax return that I apply to next year's estimated taxes, I make two entries in my checking Account. The first entry, made as of the income tax return due date, is a "Deposit" in the amount of the refund using the Income Tax Return sub-Category and a Memo entry of "applied to XXXX estimated taxes." This shows up as a "negative" expense in the income and expense reports, because that's exactly what it is. Then, using the same date, I make a "Payment" in the checking Account for the same dollar amount in the Estimates sub-Category with a Memo entry of "XXXX-1 refund applied to XXXX estimated taxes.” There's no net effect on the checking Account balance and everything is properly accounted for.

Bobbo

Thanks, Tom, that was my missing link. I already had the subcategories set up as you suggested, with one additional one: Tax Refunds. It is set up as an expense subcategory under my Federal Tax Category. I did all this 30 years ago, so now I don't remember why I put the refunds in their own subcategory.