[GNC] Journaling taxable benefit

[Michael or Penny Novack]

On 11/15/2019 6:05 AM, Christopher Lam wrote:
> It's a regular asset account.
>
> On Fri, 15 Nov 2019, 11:17 gn00b, <leo57yeung at hotmail.com> wrote:

First of all, this is not as much a gnucash question as an accounting 
question and we are not properly qualified to answer accounting 
questions << I know that I am not >> With that understanding.....

<< before>> This is just ONE example of an employee benefit that affects 
your tax liability. What is misleading you is that in this case you ARE 
getting some money while in other common cases you aren't getting 
anything "in hand". For example, employers are allowed to give employees 
a benefit of paying term life insurance premiums up to a year for 
coverage up to a year's salary tax free up to 50,000 BUT if more than 
one year or more than 50,000 coverage that benefit is taxable to to 
employee.

#2  Income

#3 ignore -- you already entered it when you took it (the $350) Your pay 
stub is simply indicating the same $350 as if they had doled it out to 
you that much at a time instead of all at once. I am correct about this? 
At the time you asked for/got the $350 there was nothing on the pay stub 
about it?

Michael D Novack

PS --- your confusion/question is essentially about an accrual to cash 
basis adjustment. They are treating the $350 amount as accruing at the 
rate of $13.46 per pay check.


>
>> My employer gives employees $350 under a wellness spending account to spend
>> on whatever we want. I claim it on public transit fares. This $350 is
>> considered a taxable benefit and every bi-weekly paycheck, $13.46 gets
>> added
>> to gross income. What would be the credit side of transaction number 2 and
>> the debit side of transaction number 3?
>>
>> 1. Spend $350 loading up my public transit fare card.
>> Dr Prepaid Public Transit 350
>>     Cr. Bank 350
>>
>> 2. Claim $350 on this account and then it directly deposits this into my
>> bank account.
>> Dr. Bank 350
>> *   Cr. What is this account? 350*
>>
>> 3. Every paycheck, $13.46 is counted as income on my paystub
>> Dr. Bank (Net Pay) 1300
>> Dr. Income Tax Withholding 700
>> *Dr. What is this account? 13.46*
>>     Cr. Gross Income 2000
>>     Cr. Taxable Benefit Income 13.46
>>
>>
>>
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