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How to Track A Refunded Expense

Should an expense be refunded by the vendor, make sure to update your accounts accordingly.

Ben Luxon avatar
Written by Ben Luxon
Updated over a week ago

Refunded expenses need to be adjusted in the Landlord Studio system to ensure your books remain balanced. Below we go through the various scenarios and how to edit the expense appropriately.

It’s important to note that refunded expenses do not need to be reported to the IRS unless the expense was not refunded in full as the IRS treats it as a canceled transaction and therefore no money has in fact exchanged hands. However, you should maintain a record of all transactions in the system for posterity.

Scenario 1: An expense is refunded in full by the vendor

Log a negative expense for the full amount

In order to maintain a record of the expense for posterity you can balance your books by logging a negative expense equal to the value of the original expense.

We recommend that you fill out the notes section on both the original and the new negative expense to ensure it's clear that the expense has been refunded in full.

Step 1: Log into your account.

Step 2: Navigate to the rental property the expense was associated with via the left-hand menu.

Step 3: Go to the expense section and search for the expense.

Step 4: Click on the expense to edit it.

Step 5: Scroll down to the notes section of the expense to add your message explaining that the expense was refunded and why.

Step 6: Go back to the expenses section on the property and “Add New Expense”.

Step 7: Enter the expense amount and add a subtraction symbol “-” at the beginning to indicate that it's a negative expense/ refund.

Step 8: Make sure the expense category is the same as the original expense.

Step 9: Add a note describing the refund.

Step 10: Save.

Scenario 2: An expense is partially refunded by the vendor

Create a negative expense for the refund amount

Sometimes an expense will be partially refunded. In this case, create a negative expense for the refund amount and add a note to each of the expense transactions.

  1. Log into your account.

  2. Select "Add New Expense".

  3. Type in the amount for the refund as a negative. eg. if the refund amount was $40 you would type in -$40.

  4. Select the same category as the existing expense.

  5. Add a description of the refund in the notes section.

  6. Review the expense details to make sure they’re correct and upload the new receipt if needed.

  7. Save.

Scenario 3: The expense is refunded by the vendor, minus fees

Create a new expense for fees

If the expense is refunded but payment, booking, or other fees still apply, you will want to track the fees as these remain deductible business expenses.

In this case, log a negative expense for the full amount (as described above). Then log a new expense for the amount of the fees and categorize it appropriately.

  1. Log a negative expense of equal value as outlined in Scenario 1.

  2. Navigate back to the expenses section.

  3. Select "Add New Expense"

  4. Enter the details of the fees

  5. Select "Legal and Other Professional Fees" as the category.

  6. Add a note describing the fee and refund for future reference.

  7. Save.

Managing refunds with bank feeds

When it comes to reconciling a refunded expense with bank feeds it can become a little complicated, as, while you can easily reconcile the original expense you won't be able to reconcile the refund.

Instead, you will need to manually create the negative expense tp balance your books following the steps outlined above.

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