M-1 Adjustments

M-1 Advanced with Tallybot

We've added Tallybot to help with your M-1 adjustments!

For Non-taxable income and Non-deductible expenses, (the most common M-1 types), simply select the M-1 tax categories and Tallybot will automatically make a Journal entry for you. The M-1 Report will automatically be updated.

Note: If your M-1 adjustment is not going to be for the total book amount, the you will need to adjust/journal out what is going to stay on the return first.

See it in action here.

Video: Using Tallybot for the most common M-1 adjustments

Video: Using Tallybot for the less common M-1 adjustments

For the other two M-1 types, where the data will not originally be on the books, (additional taxable income, and additional deductible expenses), first make a JE to get the numbers on the books and then select the M-1 tax category (on the offset account). Tallybot will take it from there.

M-1 (Most Common)

A Tax Only Account is an account that does not exist in the Accounting COA and is used to hold M-1 Tax Adjustments.

1) Create a Tax Only Account by clicking the large + icon in the Account Type header (eg Revenue, Expense, Asset, Liability, Equity)

2)  You can name the Tax Only Account. The name you choose will be what is displayed on the tax return. Click the pencil icon to change the name.

You can journal to a Tax only account. 

When you make a Tax Only Account, they will automatically appear in your Account Dropdown list. You can journal to them just like any other account.

If you delete a Tax Only Account that is used in an existing JE, the JE line and amount will be deleted. If this is the case, you will need to rebalance your JE’s by selecting a new account.

M-1 Advanced

What is it? 

The Advanced Method is where you wish to be more specific on where you wish to place your M-1 adjustment. It requires you to: 

  1. Make M-1 Offset Accounts for each type of M-1 Adjustment.
  2. Tax categorize the M-1 Offset account to the correct M-1 line.
  3. Make Journal Entries to the originating account and the Offset account.

Tallyfor's M-1 Report will automatically summarize the Additions to and Subtractions from Taxable Income.

How to set it up.

a) Create Offset Tax Only Account for each M-1 lIne you need.

b) Map each M-1 offset account you created to the appropriate M-1 line tax category

Journal to the newly created accounts. 

For adjustments for items NOT on books you may need to make an additional tax only accounts (eg Additional Taxable and Other Tax Deductible) 

M-1 Reconciliation Detail Report

Your report will look like this.

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