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December 11th, 2009Income Tax Preparation Software
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Corporate income tax software
what is an easy way to calculate & keep track of accrued interest for USA or CDN corporate bonds?.
I have bought USA and CDN corporate bonds (with semi-annual payments of interest) over the past year or so. When caculating my income taxes, I am supposed to use the 'accrual method'. WHat is an easy way to caculate the income taxes owing using accrual method, given that the tax receipts sent to me are for varying 6 month periods.....its a nightmare to calculate this for each bond and not underpay or over pay taxes over time. Is there good software out there (free or commercial?)
I think you can use a spread sheet to keep track of the accruals. I would give it a try anyway.
Here is how I think it can be set up.
Column A: Bond description
Column B: Interest rate
Column C: amount you own
Column F: accrued interest from 1st of year to todays date or to the date of when your estimated taxes are due. Since estimates are due 4 times a year, you can actually simplify the calculation by just taking the annual amount and dividing by 4 I would think.If you are on an accrual basis, does the pay date really matter? I am not too familiar with the nuances of accounting but I thought that was how it worked. So in sending in your estimated taxes, just multiply the interest rate by the amount of bonds you own. Divide the result by 365 and multiply by the number of days since the 1st of the year or from the beginning of your tax year if it is different. But you will need to take into account previous tax payments.
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