Journal Entry Question In QB

Wensdy · 10-28-2008, 05:32 PM

I started to make support payments to my mother, i am her sole supporter, financially, and give her X amount monthly from my business account.
what is the correct account name to use in QB so i can get a tax write-off at the end of the year?

Mike Finley · 10-28-2008, 06:15 PM

Disbursement or Payroll.

Write-off?

bgallese · 10-29-2008, 07:31 AM

Quote:

Originally Posted by Wensdy

I started to make support payments to my mother, i am her sole supporter, financially, and give her X amount monthly from my business account.
what is the correct account name to use in QB so i can get a tax write-off at the end of the year?

I would advise that you speak to your accountant. If you don't have one, consider hiring one. It will pay off in the long run

Scott Meyer · 10-29-2008, 01:23 PM

Yes, agreed with bgallese. Get some accounting advice. Cause even my attempt is a shot in the dark.

I went to school for business management and focused a great deal on accounting. I never took a job in accounting because tax preparation and auditing do not satisfy my want to be thinking on my feet.

Here's what my thoughts are. If your mother doesn't have equity in the company, then the company has no interest in paying her. When I say interest, I'm talking about the well-being of the company. For the company to survive and prosper, there is no reason to pay your mother. Even arguments such as "The owner will work better and be in a better mood if she is" do not justify paying her. So be careful if this is the case, you will get in big trouble should the tax man come around.

If she does have interest, as in you sold her part of the company back when it was incorporated and it is a corporation that can be owned by outside parties, then you can make payments under an equity account in quickbooks. However, the payments are either dividends or return of her stock in the company and would have to be somewhat proportional to the other shareholders (most likely just yourself.) This wouldn't be a tax-writeoff because it is income to her.

I've made one big assumption, that QB is for your company accounts. Here is my thoughts on if QB is for your own accounts.

First off, the company would have to pay you in the form of wages, and sadly this goes towards taxable income. So if you need to pull more money from a company to help make the payments, this addition will be taxed.

HOWEVER, for being the supporter of your mother (there are some rules such as living with you and/or blood relationship - ask an accountant for this) you get her personal exception of $3400ish off your adjusted income. That’s really not a whole lot in tax savings. Another requirement is that you pay more than $3400 or so in expenses a year for her (which you probably do). She would not be able to claim the personal exemption on her taxes anymore, so this would be bad if she does have any income. But she still has her standard deduction of $5450ish, so she could have income up to that limit without being taxed. Unfortunately, you can't take her standard deduction. It may be possible to receive other personal exemptions if she is blind or over a certain age.

Long story short, what account do you put it under? Just make sure its a separate expense account in QB so that an accountant can properly give you adjustments in income if possible. I'd separate it in to differing items such as food, medical, and other. Medical is a big one that you might be able to adjust your gross income.

10-28-2008, 05:32 PM	#1
Wensdy View Profile Wensdy Member Send Message Follow Blogs (0) Threads (59) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Member Trade: Drywall finishing Join Date: Jul 2006 Posts: 59	Journal Entry Question In QB I started to make support payments to my mother, i am her sole supporter, financially, and give her X amount monthly from my business account. what is the correct account name to use in QB so i can get a tax write-off at the end of the year?

10-28-2008, 06:15 PM	#2
Mike Finley View Profile Mike Finley Chief Toilet Mover Send Message Follow Blogs (0) Threads (14,078) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Chief Toilet Mover Trade: Bathroom Remodeling Join Date: Apr 2004 Location: Littleton, Colorado Posts: 14,078	Re: Journal Entry Question In QB Disbursement or Payroll. Write-off?

10-29-2008, 01:23 PM	#4
Scott Meyer View Profile Scott Meyer Enterprise Risk Manager Send Message Follow Blogs (0) Threads (37) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Enterprise Risk Manager Trade: Enterprise Risk Manager Join Date: Jul 2008 Posts: 37	Re: Journal Entry Question In QB Yes, agreed with bgallese. Get some accounting advice. Cause even my attempt is a shot in the dark. I went to school for business management and focused a great deal on accounting. I never took a job in accounting because tax preparation and auditing do not satisfy my want to be thinking on my feet. Here's what my thoughts are. If your mother doesn't have equity in the company, then the company has no interest in paying her. When I say interest, I'm talking about the well-being of the company. For the company to survive and prosper, there is no reason to pay your mother. Even arguments such as "The owner will work better and be in a better mood if she is" do not justify paying her. So be careful if this is the case, you will get in big trouble should the tax man come around. If she does have interest, as in you sold her part of the company back when it was incorporated and it is a corporation that can be owned by outside parties, then you can make payments under an equity account in quickbooks. However, the payments are either dividends or return of her stock in the company and would have to be somewhat proportional to the other shareholders (most likely just yourself.) This wouldn't be a tax-writeoff because it is income to her. I've made one big assumption, that QB is for your company accounts. Here is my thoughts on if QB is for your own accounts. First off, the company would have to pay you in the form of wages, and sadly this goes towards taxable income. So if you need to pull more money from a company to help make the payments, this addition will be taxed. HOWEVER, for being the supporter of your mother (there are some rules such as living with you and/or blood relationship - ask an accountant for this) you get her personal exception of $3400ish off your adjusted income. That’s really not a whole lot in tax savings. Another requirement is that you pay more than $3400 or so in expenses a year for her (which you probably do). She would not be able to claim the personal exemption on her taxes anymore, so this would be bad if she does have any income. But she still has her standard deduction of $5450ish, so she could have income up to that limit without being taxed. Unfortunately, you can't take her standard deduction. It may be possible to receive other personal exemptions if she is blind or over a certain age. Long story short, what account do you put it under? Just make sure its a separate expense account in QB so that an accountant can properly give you adjustments in income if possible. I'd separate it in to differing items such as food, medical, and other. Medical is a big one that you might be able to adjust your gross income. __________________ Build Smart www.MyRiskControl.com

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