QuickBooks allows you to record the Tax refund and register tax transactions. You should always maintain tax transactions in the Tax Payable Account so that they can be picked up by reports and make sure the entries are to be made through the official entry forms. For recording the IRS refund you should get in touch with our experts.

To Record the Tax Refund In QuickBooks Follow The Steps Given Below

To Record the Tax Refund In QuickBooks follow the steps provided below:

Total Time: 3 minutes

Go To QuickBooks Software

💠 Open your QuickBooks software.
💠 Then from the top menu line go to the suppliers menu.

Choose The Tax Activities Group

💠 Next choose the Tax Activities group and select the Manage Tax option.
💠 After that you need to click on the Receive Tax Refund button.

Fill The Details & Save

💠 Now fill in the details in the make deposit screen along with the amount that is to be refund.
💠 Next see the details and click on the save and close button.

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How To Record A Payroll Liability Refund Check

Note: Make sure before performing the steps given below you should create a Payroll Liabilities Balance Report and examine for the credits that associate the amount of refund and the tax item

  • To enter a Payroll Liability refund check, follow the steps given below:
  • First of all, go to the Employee’s menu and choose the Payroll Taxes and Liabilities group then tap on the Deposit Refund Liabilities option.
  • Next you need to choose the vendor’s name by whom the refund check was submitted.
  • Further enter the date of deposit for the refund date field.
  • Now go to the For Period Beginning field and type in the day for the pay period, when it started,and from when the refund will affect.
  • Now select the way you wish QuickBooks to manage the deposit.
    • Categorize it under the funds that are Undeposited: This is used to add the amount in a savings account and allows you to enter the deposit along with several other items. This category demands the use of Make or Record Deposit option for completing the process.
    • Deposit To: It is used to track the amount for the account of your wish.
  • Then go to the section of Taxes and Liabilities and choose the payroll items that are affected because of the refund made.
  • Next you need to get the positive amount enteredin the associative Amount column.
  • After that click on the OK button.
  • If you are working with the Assisted Payroll (US only):
    • Go to the Employees tab and click on the Send Payroll Data option.
    • Once you click on the Send Payroll Data option the Send or Receive Data window appears. Here you can view the Tax reconciliations and Funds that are to be removed for the total sum of Deposit Refund of Taxes and Liabilities that are entered by you recently.
    • After that get a secure connection with our servers, if the payroll liabilities is hyped up then the liability balance does not remains positive and the shows in negative.When you deposit this refund, it shows the increase in the balance of liability and it again reaches to zero.

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Issues While Recording Tax Refund

  • One of the issues says the Corporation Notice of Assessment was transpired and we have received a refund. Should I credit the other liabilities and debit the bank on Journal entry?
  • Why can’t we track the sales tax refund through the sales tax agency? And Why am I not allowed to delete the old payments, as they are already verified and reconciled. Please help me with this issue.

To solve these kinds of issues you can contact our SMB Tech support team.

So, this is how you can record tax refund in QuickBooks. If you face any issue in recording tax, get in touch with our SMB Technical Support Team. They will assist you 24*7 Call Now @ smbaccountants.com.


  1. How do I record a tax payment in QuickBooks Online?

    You can follow the below-mentioned steps to record your tax payment in QBO:

    💠 Initially, go to Taxes and select the “Payroll tax”
    💠 Next, select and click on the “Pay Taxes”
    💠 Now, click on the Record payment on the page of Pay Taxes that you wish to pay 
    💠 Select Other and enter the actual date for the payment that was made 
    💠 Also, enter the appropriate check number 
    💠 Finally, click on the “Record” option.

  2. Why do you adjust the liability of the sales that you owe?

    You can adjust your sales tax liability due to various reasons such as:

    💠 A fine paid for late or non-payment by your tax authority in the preceding tax year.
    💠 A credit issued by your sales tax agency for past over payment or early payment discount.
    💠 Rounding the differences between QuickBooks and your sales tax forms.
    💠 Sales corrections in a preceding time.
    💠 Tax holiday on sales declared by your department.

  3. How do I know that I have a tax over payment?

    There are several ways to know that you have a tax over payment. Here are a few of them:

    💠 A negative entry appears in your payroll account at the Pay Taxes tab.
    💠 When you receive a credit receipt from the IRS or the state department.
    💠 You may receive a warning about over payment when attempting to file a document.

Further Reading