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How to handle tax filing when refunding a credit card transaction using check/cash
Every once in a while, we would have a refund that falls outside of the refund window. If the amount is small, we will refund in cash. If it's a larger amount, we will refund in check. Here's the problem, since Square would report the original transaction to IRS, but the refund is outside of the Square system, how should we handle the tax filing of the return?
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Accounting and Finance
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That would be something to have your accountant handle, tax advice on the internet is free but can be costly if wrong for your specific state or any other of numerous reasons. There isn't a way to show a cash refund to negate the CC sale. It definitely isn't a good operating procedure to do a cash refund on CC for this reason and the customer can file a dispute for the original CC transaction and if you gave cash back there is no proof and they will get their money back from the original too.
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I definitely will ask my accountant about it. In fact, my primary concern is not how to file the tax, but how to register such transaction and pass it to my accountant at the end of the year. Square doesn't seem to have a way to record such transaction. I am currently doing it manually on a spreadsheet. I guess I should have frame the question differently.
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that sounds like a good way to keep track to give to them. There isn't a way to show a cash refund **bleep**ociated with a CC trans or even not **bleep**ociated with one without having a cash transaction to tie it to.
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