Why Don’t Journal Entries Reflect on the Tax Return?
And How to Add a Tax Adjustment Manually the Right Way
You may sometimes notice that the journal entry you added to the tax account does not appear within the tax return.
The reason is often related to how the entry is recorded or system settings.
Let’s understand the mechanism clearly.
First: How Does a Journal Entry Reflect on the Tax Return?
The tax return in the system depends on the account linked to tax within the chart of accounts.
And the account is usually number 2105 (Value Added Tax).
For the entry to reflect in the return, the following conditions must be met:
1) Use the Correct Account
The line in the entry must be linked to the tax account (such as 2105).
If you use a regular account or a liability account not defined as a tax account, it will not reflect in the return.
2) Specify the Tax Type from the “Agency” Field
When selecting the tax account within the entry, an additional field called Agency will appear next to the account.
In this field, you must select the tax type.
If the tax type is not specified in the Agency field, the entry will not be included in the return.
This is a critical point.
3) Do Not Manually Select “Inputs or Outputs”
The system does not ask you to specify whether the tax is an input or output.
This is determined automatically based on the position of the account in the entry:
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If the tax account is debited → it is considered input tax
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If the tax account is credited → it is considered output tax
In other words, the direction of the entry determines the type of tax.
4) Date of Entry Reflection in the Return
The reflection of the entry in the return depends on the setting in:
Settings → General Settings → Date of Supply Used in the Tax Return
There are usually two options:
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Date of Issue
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Date of Due
The return will be based on the option selected there.
If the entry is dated outside the tax period selected in the return, it will not appear.
Second: Are Entries Reflected Automatically?
Yes.
As soon as:
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You select the correct tax account
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You specify the tax type in the Agency field
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The date falls within the tax period
The entry will automatically reflect in the return when it is generated.
Third: How to Add a Tax Adjustment Manually via Entry
If you need to add a tax adjustment (increase or decrease), you can do this through a manual journal entry.
Cases Where the Entry Will Not Be Reflected
The entry will not appear in the return if:
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You did not use the correct tax account
-
You did not specify the tax type in the Agency field
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The entry date is outside the tax period
-
A regular account was used instead of a tax account
Very Important Point
The return does not rely only on the account name, but on the account actually linked to the tax type within the system.
