In the presentation, we will discuss a method for tracking tax deductions related to medical costs within our business account using a classes method within QuickBooks. Here we are in the home tab, we currently have the open windows open, you can open the open windows by going to the view drop down and selecting the open windows list. We're not going to open up the check register by going to the banking drop down and go into the US register item. And we're going to have the checking account that being the register we want. So far, we have an entering data directly from our bank statement into our check register add in these items related to tax deductions as we go. Go into our bank statement.

This is the data that we have been inputting our bookkeeping process just entering this data directly into the bank statement. We left off last time entering the we just entered Verizon is in there. And now we're going to add the new items. So we're going to add A normal type of item Edison, which is a utility company, and just keep on going as we normally would entering the transactions from our bank statement was paid out of the bank. Now we're going to enter it into our bookkeeping system. And then we're going to have the new item, the Blue Cross, and the doctor, he and this is kind of the Rite Aid.

These are going to be medical type expenses that we want to break out, not because they're deductible for the business, but because we want to record them and track them in case their deductible in some other area. Again, is it deductible, you want to ask your tax preparer, but if it's something that you've been tracking that you need to provide at the end of the year, then this is a method that we're looking to track them in a place where we can easily put all this information together in therefore, we have consciously made the change to pay medical expenses out of our business account, so that we can assign them but assign them to a special personal account and account that we then label And get a class to that we can track in. So we're going to first do our normal account the Edison Electric.

So we'll go back up top. And we're going to say that this happened on 316. So, March 16 2019, the year we're working on the account, the cheque number 1035. And then we're just going to type in Edison, it should populate for us because we paid them before. And then if we select a tab, it's already going to the utilities expense. That's where we want it because Edison's Electric Company, and if we select the drop down, then it's an expense.

So everything looks good. This is just normal type of transaction that we have entering that in, then we're going to go back and we're going to say, Okay, now we have two Blue Cross, which we hadn't put there last month. And we're consciously putting them there this month, because we are adding those and we want to track them and be able to provide that information to our tax preparer, although it's not business related. So we're going to enter that into our system and assign a new account from It. So we're going to go into our QuickBooks file and that happened on the 19th. So we're going to say the 19th 1030.

Actually, I have to check numbers that have the same again, sorry about that. But it shouldn't affect what we're doing here. So we're going to say Blue Cross is the new one. Blue Cross. Again, this isn't a business related expense, we're assuming that we're paying this. And it's something we have to track outside for tax purposes, but not business related.

And we'll say tab. And again, this isn't tax advice, obviously, you could you have to consult to see whether or not that would be the case, because medical expenses can be one of those items, where depends on the entity, and what type of system we have set up. So in any case, this is what we're doing here. We're saying this is not a business expense, but we want to track it. So we're going to say quick add, and we're going to say it's a vendor, and we want to add the amount of 500. And then we need to have an A Count, I've just I've just pasted this in here.

So personal deductions, medical insurance. So we're going to clearly define and say, Hey, this is something that shouldn't be on the business side, but on the personal side, and we're going to label it as medical insurance so that we can then track it. Once that is set up, I'm going to select the split, and then it's going to tell me Do I want to set it up? Or I can just hit Tab? It's gonna say, do you want to set it up? We're going to say, Yes, please set it up.

I'm paraphrasing what it's saying personal deductions is not in the account list set up. That's what I'm asking if we want to set it up. So here it is the personal deduction, that's what we want medical insurance to kind of cut off the end of the name there. That's okay. That should be enough. That should be enough.

Maybe we should just say insurance like that. And then we'll say Save and Close. And then we're going to split so that we can have the classes over here. So we're going to assign that then to the tax deduction, personal area. So that's the one we want and we're going to go ahead And then record that we're going to keep the check number. And there we have that.

Okay, so then we've done the Blue Cross back to our bank statement here. So jumped over there kind of quick, we're back on our bank statement. I'm going to cross that off. Now the next one, we went to Dr. e. This is our, this is our doctor. Their name is Dr. e. And so we and we paid for a doctor visit 195. So same kind of thing.

It's not going to be it's personal. It's not business related, but we want to track it because we may our tax preparer may want it. So we're going to say 315 1036 and we're going to say this is for Dr. E, Dr. E and set that up quick setup. We will have it as a vendor here and Dr. E, we pay the 195 and then we're going to select the account. Once again, it's a new account, we could put it into like a group that has all medical type of stuff in it, but it's probably best to break out the insurance and the non insurance. I'm just going to put medical So we'll have the same personal deductions, but this time just medical costs.

And I'm going to include in here, the doctor visits and any kind of like prescription drugs that we have or anything like that. We could break out the prescription drugs and medical visits, which might even be nicer for the tax preparer. But we're, we're here we're going to break out the insurance that we pay, and then everything else medical expenses and costs, we can then go into the detail and see what those are and kind of break them out later. As long as we don't have too much in any particular account. I hit tab and that means it's, it's asking if we want to set up again, I'm paraphrasing, I'm gonna say yes, please set that up. It's going to be an expense type account.

That's all we need. So we're going to say Save and Close. And then we're going to go to the splits item down here so we can add the class to it. And then there is the class we're going to say class, and I want to make that a tax personal class area, and then we're going to record that one. All right, one more, one more. We found Dr. E doctor he has been put in place and now we've got right a drugstore paid $37 assuming that's going to be a prescription drug that we want to track now, because it might possibly be a deduction, clearly not a business deduction, but possibly personal deduction.

So we're going to go back over here and we're going to say that that's going to happen on 320. And check number 1039 1039. And we're going to pay I'm going to type the sense a new one, right? A A ID, drug store, tab, quick add, we're going to add that vendor, that's what we want. We paid $37 for drugs. And we're going to put that into I'm going to make this into the same one we set up which is prescription drugs, you can't see it well, maybe be able to see it down there.

But first of all deduction, medical costs, so we're going to put that in the same area. And then we need to assign the class to it. But this time, I'm going to say, Well, what if I forgot what if I didn't assign the class? No big deal, we'll see why. We're going to say okay. And then let's take a look at our reports, we're going to go to the reports drop down up top, we're going to go to company and financial, then go down to our profit loss by class, changing the date range to Oh 10119 1230 119, January 1 to December 31 2019, the year we are working on, we then scroll down and we've got our medical costs here and make this I'm going to make this a little bit wider so we can see it.

And so there's our medical costs. And here's our medical insurance. We can see also that that 37 is in the wrong area. It's unclassified, which is normal business, it's not over here, easily seen, it's clear the fact that it's under personal that it should be envy this column. So what we need to do is just double click on that item Double click on it again, and then assign the proper class, which will be the tax deduction personal. And then save and close, save the changes close out this screen.

And there has been removed and changed and gone back over here. If we double click on this item, then we can see our detailed transaction which might be good, especially in this case to give to the tax preparer. Because they might say, hey, well, maybe the drugs aren't deductible and the doctor visit is deductible or whatever I'm not we're not getting the tax stuff here or you know, the planning phase of it, we're just saying this are things we think might be deductible, we're trying to put them into the categories we can, if we have more than one thing that that might be deductible in one category, then that means that it's more necessary to provide the detail which we could then go in there and kind of figure out what is in there in which is the duck which is not, you don't want to put too many things.

I want to Count because sorting through too many things, of course, takes a lot of time. That's why we're breaking it out into categories. But if you have a few different things in one category, such as the doctor visits and all the prescription drugs, then we might be able to sort that out if necessary at the end of the year. So that's going to be this one, we found the Rite Aid. Next time, we're going to be moving on to the IRA, which is a another item that we may may be something that could be deductible, and it might be something that we're not doing in the business, meaning some type of retirement plans are often going to be deductible. And again, it's one of those things that a business could set up a retirement plan like a 401k or an IRA or simple IRA or Roth, you know, or they might have something outside of the system that they want to track they know they need to give to the tax preparer.

We will assume this is outside of the bookkeeping, something that we need to track but not in the business next time.