To track income tax, each tax-related account must have a tax line assignment. If you choose one of the preset charts of accounts during the New Company Setup Assistant interview, those accounts already have tax line assignments; the instructions below do not apply to you.
Follow the instructions below when:
These instructions do not apply if you need to add new accounts to a chart of accounts you chose through the New Company Setup Assistant, or if you file Form 990, 990PF, or 990T. See instead Assigning tax lines to new accounts.
To set up the dummy company:
If you file Form 1040: We recommend that you assign tax lines only to income and expense accounts. Although QuickBooks also lets you assign tax lines to balance sheet accounts, in many cases a balance sheet account won't report the correct total at the end of the tax year. For advice on when it's appropriate to assign a tax line to a balance sheet account, see your accountant.