Some questions about tracking personal finances

Wed Jan 4 13:30:03 EST 2017

Replicon,

This is a lot to ask; I’ll weigh in on what I can. Note: IANAA. These are my personal ideas.

1) The Tax-Related aspect of GnuCash is cumbersome to set up, but once it is set up, works rather nicely for a US tax summary—for me at least. To attach an account to a particular tax line, open the Tax Report Options dialog, locate the account which you want to include, identify the tax line it pertains to (e.g., W-2 Wages, Self) and save. Note that you have to do this process one account at a time. The only exception: if you have multiple accounts that you want to assign to the same tax line, you can select them all and assign them at once. This is why it is cumbersome to set up. Once they are set up, you can run the TXF report and get a tax summary.

2) Pre-tax lines can complicate things, since they affect the total earnings line. You can try to split your payroll income into Taxed and Untaxed, but my experience is that pay stubs don’t give you that total pretax number, forcing you to figure out which lines are pretax, add them up, enter this pretax figure, and then deduct that from the earnings total. It’s not rocket science, but it can be a hassle!

3) I find it best to have separate expense accounts for anything I either plan to receive a tax statement on (e.g., brokerage dividend statements), or want to enter on a particular line (e.g., Expenses:Business:Equipment). Then, I assign these accounts to particular tax lines.

Skipping 4 & 5 & 6.

7) I have Expenses:Charity, which I attach to the appropriate tax line. They aren’t negative income; they are deductible expenses, however.

8) You write off goods at a different (IRS-defined) value. Personally, I use an online service (ItsDeductible) to enter donation descriptions, which provides me with a deduction value based on typical assessments. I imagine you could write a spreadsheet to do the same. Note that I am not using GnuCash for this.

9) Income:Other Income -> Assets:Cash (if you really need to put it in)

10) I’d list it as Income:Other Income->Assets:Cash, but I imagine there are more principled, accountantly ways of handling this.

HTH,
David

> On Jan 4, 2017, at 9:17 PM, replicon <replicon at gmail.com> wrote:
> 
> Hi all,
> 
> So, I've had such a good time setting up my biz stuff with gnucash that I've
> decided to use it starting this year to track all my money and where it
> goes.
> 
> It's pretty easy to set it up for my personal tracking, but I want to do it
> 'correctly', such that in addition to that, if I choose to do my taxes with
> an accountant next year, rather than TurboTax, I can generate a bunch of
> reports, hand them over, and expect them to be correct.
> 
> 
> So, while going through my various stuff, I've come up with some relevant
> questions that I hope someone can answer. If this is not good form for this
> list, I'm happy to break these up into separate posts...
> 
> 
> 
> 1) "Tax-Related" Accounts: It looks like you can set tax options (through
> some workflow other than that checkbox), but the manual doesn't really give
> that section a proper introduction. Is this something I should worry about,
> or something I can configure later without having to go back in and move
> everything around?
> 
> 2) If I look at my paystub, it's got a breakdown of where things are going.
> Some of them are pre-tax (e.g. 401k, benefits (dental/vision/medical)), and
> some are just taxes. Taxes are easy, just transfer to expense:Tax
> subaccounts, but is there any best practice for the pre-tax stuff? Is that
> just generic expenses?
> 
> 3) Itemization - so far, I've always gone with the default deduction, but
> for all I know, this might change. What are some best practices to help make
> that decision? I assume a "sales tax" account under Expense:Tax is one, but
> are there any others? I know very little about this stuff.
> 
> 4) RSUs: I get restricted stock units on a vesting schedule, and part of
> them are always sold to account for income tax. How do you guys model this?
> Two transactions, one to receive the RSU (transfer: Income), and one to
> auto-sell the tax portion (transfer: Expense:Tax:Income:RSU or something)?
> 
> 5) 401k: Any special considerations? I was thinking of doing something like
> this:
> https://lists.gnucash.org/pipermail/gnucash-user/2003-January/005402.html -
> fairly simple, though the transactions are just adjustments to the total,
> for calculating net worth. This kind of goes back to the "pre-tax" question
> as well.
> 
> 6) Home: I paid off the condo I live in a while ago. I assume this is now
> just an asset with... whatever zillow tells me the place is worth? Or should
> it be "what I bought it for" (price + closing costs)?
> 
> 7) Charitable Donations 1: When I give to charities, and get a tax receipt,
> how should I model that? I get the sense that such "tax writeoff" type
> things just need to be "negative income", since that's my understanding of
> how it's done at tax time.
> 
> 8) Charitable Donations 2: Does the above apply for the case where I give
> existing items (e.g. clothes), and I get a blank receipt on which to write
> what I think those clothes were worth?
> 
> 9) Finding extra unaccounted-for cash: Let's say I find a $100 bill in my
> couch in a few months. Does that "Cash" transaction just balance against a
> new "opening balance"? I can't imagine it's "income", since it's already
> mine, so it's like... "an opening balance I wasn't aware of until now" :-)
> 
> 10) Selling personal items: Same kind of question as above. If I hold a
> garage sale, and sell a bunch of things I own at a steep discount, is that
> considered "income"? I'd be more inclined to think of it similarly to
> "finding a $100 bill in my couch", since I'm just selling stuff I bought a
> long time ago at some un-calculable loss.
> 
> 
> 
> Thanks for taking the time! I really appreciate this, this list has been so
> valuable to me!
> 
> Happy New Year!
> 
> 
> 
> 
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