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May 18, 2021
Question

TurboTax and Book Retained Earning Off by 50% Meal and Entertainment

  • May 18, 2021
  • 1 reply
  • 0 views

Hello. I can't seem to find a clear answer to this question from historical search. I am using TurboTax Business 2020 version and using WAVEApps for bookkeeping. My retained earning on book is exactly $559 lower than my TurboTax Retained earning amount. $559 is the 50% of nondeductible meals and entertainment for the 2020 tax year expense. Additionally, my book Profit & Loss shows a net profit that is $559 less than TurboTax net income (taxable income), which is also due to the 50% nondeductible meals and entertainment portion. I would greatly appreciate anyone who can guide me through a proper journal entry with debit coming from which account class (equity, liability, asset, etc.) and credit from which account class so that the book amount matches with TurboTax amount. If this is not the correct path, how would I make this adjustment in TurboTax so that it matches with my book? Please be specific on the TurboTax adjustment too if possible. Thank you in advance.

1 reply

Employee
May 18, 2021

Have you adjusted your cash account to begin with since TurboTax will most likely not subtract the non-deductible portion.

May 18, 2021

Yes all other accounts including cash accounts are in order from start of business and throughout the years.

Employee
May 18, 2021

I meant on your balance sheet but perhaps I am misunderstanding the exact nature of the issue.

 

Your balance sheet is out of balance by $559, is that correct?

 

Just as an aside, I am not familiar with the Wave accounting software.