Is a tax refund Other Income?

It depends on what is being refunded. A refund of your own overpaid money generally is not new income; a business owner should ask an accountant how a specific refund should be treated before assuming either way.

Should I record a refunded purchase here or reduce the original expense?

Reduce the original expense account when you can. It keeps that spending category accurate instead of inflating both an expense and an income line for the same transaction.

4900incomeNormal balance: CreditBusiness & personal

4900 — Other Income

Not every dollar that comes in is what a business sells or what a paycheck deposits. Interest credited by a bank, a rebate on a purchase, a small gain from selling something you no longer need, a gift received — all of it is real income, and none of it belongs in the accounts built for your primary earnings.

Other Income is an income account, so it carries a normal credit balance: money arriving is a credit that grows it. A refund of an expense you already recorded correctly is a judgment call worth getting right — the cleaner move is usually to reduce the original expense account rather than record new income, so your spending trend stays accurate rather than looking like you spent the full amount and then separately earned some back.

This account is meant to stay small. If a particular source of "other" income becomes regular and sizable — recurring side income, a consistent rebate program — it is usually worth asking your assistant to set up its own dedicated account rather than letting everything blend together here indefinitely.

What belongs here

interest earned on a checking or savings balance
a rebate or cash-back payment received
a one-time gain from selling an asset for more than it was worth on the books
a gift or inheritance received (personal books)
proceeds from a garage sale or reselling personal items (personal books)

What does not belong here

core business revenue — Sales (4000) or Service Revenue (4100)
a paycheck — Salary (4000) on the personal chart
a loan or an owner contribution received — neither is ever income; those are a liability or an equity entry
a refund of an expense you already logged correctly — reduce the original expense account instead of recording new income for it

Where it shows up

Shows on the income statement as a small supporting line below core revenue. A large or fast-growing balance here is usually a sign it is time to split part of it into its own dedicated account.

Common questions

Is a tax refund Other Income?: It depends on what is being refunded. A refund of your own overpaid money generally is not new income; a business owner should ask an accountant how a specific refund should be treated before assuming either way.
Should I record a refunded purchase here or reduce the original expense?: Reduce the original expense account when you can. It keeps that spending category accurate instead of inflating both an expense and an income line for the same transaction.