Recording transactions which will be taxed in the future

Derek Atkins warlord at MIT.EDU
Mon May 17 22:07:42 EDT 2004

Store the tax-you-owe as a Liability, then you can offset that liability
in any way you wish when it comes to paying it.  The best way to do this
is probably an "extra" transaction.  You just need to record this when
you actually make the purchase, rather than figuring it out later.

FWIW, Indiana isn't the only place to do this -- Massachusetts does
it now, too.  :(  Stupid Tax Collectors...  Feh..


"Mark H. Wood" <mhwood at> writes:

> 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.)
> Suggestions?
> -- 
> Mark H. Wood, radical centrist     OpenPGP ID 876A8B75     mhwood at
> No amount of clipart will save dull writing or an uninteresting topic.
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> gnucash-user at

       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL:    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available

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