Last year's tax return

[Michael Vrable]

On Wed, Sep 09, 2015 at 07:50:11AM -0700, melbogia wrote:
> Hello, I have been using gnucash for a little over a year, and I have 
> set up taxes like so
> 
> Expenses:Taxes:Federal
> Expenses:taxes:State
> 
> When I filed tax return for 2014, I owed some taxes so I filed them 
> under the above categories. So a sample ledger looks like so:
> 
> Expenses:Taxes:Federal (Expenses:Taxes:State looks similar)
> 3/30/15   pay check federal tax   200.00
> 4/15/15   2014 federal tax           500.00
> 4/30/15   pay check federal tax   200.00
> 
> The problem is that when I run an expense report, it includes the 2014 
> federal taxes, so the taxes I paid this year looks inflated. 
> Technically I did pay the 2014 taxes this year but those taxes were 
> for last year. How are folks handling this? Is there a better way? 
> Should I just "back date" the 2014 taxes to 12/31/14 so it doesn't 
> show up in my expense report for this year?

My strategy has been to create a liability account for taxes due but not 
yet paid.  Once I've figured out taxes for 2014, I create a transaction 
dated the end of the year for the tax expense:
     2014-12-31  Federal Taxes Due
                 Expenses:Taxes:Federal      500
                 Liabilities:Taxes                   500
so taxes show up as a 2014 expense.

The tax payment with the tax return is then to pay off the liability and 
doesn't affect the 2015 income statement, but does show up as a cash 
flow item for 2015:
     2015-04-15  Pay 2014 federal taxes
                 Liabilities:Taxes           500
                 Assets:Bank                         500

(At the end, the Liabilities:Taxes account should be back to a zero 
balance.)

--Michael Vrable