USA How to record a refund from the IRS?

[taxicab]

Hi,
In my software package that uses double entry accounting I would like to record a refund from the IRS. The refund is marked on the check as:

03/2013 F-941 REF 01
06/2013 F-941 REF01​

That refund was due to an overpayment to the IRS towards payroll taxes - SSA (wrong calculations on my part, my bad).

How do I record such a transaction?
Where do the money come from? Is it an income?

the money was paid from

Liabilities\AccountsPayable\employerFiCA
Liabilities\AccountsPayable\employeeFiCA

into Expenses\SalariesGross
and Expenses\Taxes\Employer_FICA​

this is an LLC/S-Corp type of bookkeeping that I do.

Now How do I go about with this check from the IRS which is a refund?
I don't think it should be an income because I have already paid sales tax on that money once the money was earned.
On the other hand the money is probably subject to income tax in 2013 - then is is a kind of an income.... I am not sure



thank you for any answers.

Ben

 

[kirby]

Check from govt is for 2013, when did you get it and are you a cash or accrual basis taxpayer?

 

[Counterofbeans]

I'm guessing it's not material, but that needs to be done on a case-by-case basis.

Ultimately, you will debit cash and credit the appropriate payroll tax expense accounts that you mistakening recorded too high. Since we are talking about an LLC/S-corp situation, the owners received a little more income in the prior year than they otherwise should have and that adjustment will go the other way in the current year.

I'd probably just record the cash and reduction of expense (not income) in earliest period still open in your general ledger and call it a day.