Recording transactions which will be taxed in the future
Mark H. Wood
mhwood at ameritech.net
Mon May 17 21:43:04 EDT 2004
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I'm seeking advice on how to handle Indiana's "use tax". Our state
legislators are too lazy to negotiate reciprocal tax collection agreements
with the other states, but of course they want the money regardless.
Anyway, a resident of Indiana who buys something from a business in
another state (mail order, Internet, phone, fax, whatever) for delivery in
Indiana owes Indiana sales tax on the purchase, but the seller is not
obliged to collect the tax unless he has a physical presence in Indiana.
Instead, the lucky citizen is required, at income tax time, to pore over
his journals and find all such transactions, add them up, figure the tax,
and send it in. I don't mind paying the tax, any more than any other tax,
but finding the relevant transactions is easily the most hateful part of
filling the income tax form.
So, what I'm looking for is a way to note out-of-state purchases in a
GnuCash register, in such a way that I can have GnuCash collate and total
all such purchases for the previous tax year instead of having to hunt
them down and remember who collects tax and who doesn't.
Alternatively, perhaps there is a way to record a synthetic transaction as
a split in the real transaction, transferring virtual money between the
sales tax account and a sort of phantom escrow account that's merely used
to total the tax owed but not yet paid. At the end of the year, money is
transferred as needed to zero out the phantom account in order to record
the actual payment of the tax. It's all rather vague -- I need more
practice in "thinking like an accountant". (One additional complication
is that I've arranged my withholding so that the use tax is almost always
entirely consumed by a charge against a refund of excess income tax paid,
so there's actually no cash out, just less cash in later.)
Mark H. Wood, radical centrist OpenPGP ID 876A8B75 mhwood at ameritech.net
No amount of clipart will save dull writing or an uninteresting topic.
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