[GNC] IRA/401K income detection

[Gyle McCollam]

Michael has the right approach.  Recording this when taking income involves 4 account.  However, don't forget that if it is coming from a Roth IRA there is no tax.  401K and Traditional IRA will involve a tax liability, but that is a whole other animal.


Thank You,
Gyle McCollam

Gyle McCollam

609.680.2326                     Mobile

gmccollam at live.com<mailto:gmccollam at gyleshomes.com>           email

________________________________
From: gnucash-user <gnucash-user-bounces+gylemc=gmail.com at gnucash.org> on behalf of D. via gnucash-user <gnucash-user at gnucash.org>
Sent: Wednesday, March 16, 2022 6:09 PM
To: Adrien Monteleone <adrien.monteleone at lusfiber.net>
Cc: GnuCash-User <gnucash-user at lists.gnucash.org>
Subject: Re: [GNC] IRA/401K income detection

Adrien,

Overall, I think you're right, but I believe the tax features you're referring to are used to calculate taxes for a business? The issue with deferred income-- and this has been true for as long as I can remember-- is that when Joe Retiree takes money from their IRA, the IRS considers it income, and taxes it accordingly. But when Joe tries to enter the transfer from their IRA to their checking account in GnuCash,  it doesn't get treated as income, and there doesn't appear to Joe to be a straightforward way in GnuCash to make it into income that they can track for taxes. That is a decidedly different tax issue than the one you've mentioned, IMHO.

David T.


-------- Original Message --------
From: Adrien Monteleone <adrien.monteleone at lusfiber.net>
Sent: Wed Mar 16 13:09:10 EDT 2022
To: gnucash-user at lists.gnucash.org
Subject: Re: [GNC] IRA/401K income detection

I could be missing something, but I thought that was already covered by
one of the answers. Also, I'm pretty sure the proper place to record and
track that is in an Asset account, not Equity.

As for the transactions, if you need to do virtual 'extra tracking'
beyond just the physical withdrawal, you can do that all in one
transaction rather than 2 or more.

A transaction can have more than 2 splits. So you'll have your real
splits modeling the real world movement of funds, then you can have
additional pair(s) of splits that handle 'tax due' type of tracking.

Finally, there are Tax Features built in. Have you investigated them and
do they not address the 'tax due' tracking you are looking for? (you may
not need additional accounts and virtual tracking transactions, just run
a report)

Sorry I can't help more specifically. I don't use GnuCash for such
purposes. Plenty on this list do however. Someone is sure to be able to
offer a step by step at some point.

Regards,
Adrien

On 3/16/22 9:48 AM, David G. Pickett via gnucash-user wrote:
> OK, not anything like an accountant, so my books have just asset, liability, income, expense.  Equity might be a better place for the IRA/401K, since it is an asset with a varying value and an attached tax liability TBD.  So, how should I have set up such 100% pretax deferred income accounts to capture the income when money is transferred out, preferably without two transactions (talk about your double entry!)?

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