Associating a tax line with each account lets you create tax reports to help you fill out your tax forms.
Choose the tax line on which you would report the income or expenses tracked by this account. For example, if the account tracks your automobile expenses, choose “Schedule C: Car and truck expenses.” If you are not sure which tax line to choose for this account, check with your accountant.
The type of tax form you choose in the New Company Setup Assistant or in the Company Information window determines which tax lines appear in the list. For example, if you chose Form 1040, you'll see tax lines for Form 1040 and the schedules and forms typically filed with Form 1040.