I have been using tiller for some time now and have tried various templates and approaches. This year I tried an approach that looks at gross income, itemized taxes and deductions as expenses using the paycheck deduction calculator tool. This tool takes all your input information and tracks it as an expense. I am not sure how much value this adds for me vs. just tracking net income. One challenge I am facing is that I have all my taxes itemized for each paycheck. The challenge I have is that when I get a tax refund I am not sure how to handle that since the refund is not itemized. This last year I just had a Tax expense category so when I have a refund I show a surplus in this category, but the reality is that it should balance out against the taxes I have paid. So not sure how to handle that. Do people generally track gross income against all expenses including taxes, 401k, medical, insurance etc… or just track net income. Also would like to know how you handle tax refunds
Good morning, i don’t track my itemized deductions and gross income…yet. i just haven’t found the need to go that in depth at this point, however if/when i get a tax refund or have to pay income taxes i allocate both to the same category so over time it will balance out. I.e. last year i had to pay so my taxes category was up but say this year i get a refund, then i will have a surplus in taxes. I would think that the expense of taxes paid category that you could do the same and credit it with the refund to help offset some of the expense. That’s definitely not going to be the only way to do it, but that’s how i chose to do mine currently.
I work off of gross pay using the nifty Paycheck Deduction Transactions Generator. And then this is what I’m thinking will be my workflow for tax transactions:
-I will tag both my wife and my federal tax withholding with a Fed Tax tag and state tax withholding with a MD Tax tag (we’re in Maryland).
-When we either pay any additional taxes or receive a refund, I will assign those to an Income Tax category, but I will also use the Fed Tax or MD Tax tag.
What this will do for me:
-I can run a report on the Fed Tax or MD Tax tags and get all the transactions, including both withholding and additional payments or refunds. In other words, those tags should show my net total income tax payments.
-Since my wife and I earn separate incomes but file jointly, these tags will allow me easily to see the combined tax transactions for both of us.
I kind of just came up with that on the fly in answer to your question, @fost9508, but curious what folks think.
Since you’re just tracking net income, I think I would have the tax refund/payment use the same category as whatever you’re using for “Paycheck” net income. You have more/less net income, as opposed to more/less expense.
Thanks. Using the paycheck deduction calculator I have broken taxes out based on fed income, fed social security, fed medical, and for state we have income and disability. Sounds like you are bucketing all the fed taxes into a single “FED” bucket and similar with state taxes. That would make it more simple when dealing with the tax refund or payment.
I am curious what you are doing with 401k deductions, mendical, dental, vision etc…
Hi, I have tags for all of them. I feel like I need a “Tags are My Jam” t-shirt or something as it seems to be my answer to lots of questions in this forum, but I really do use them a lot to help keep things sorted.
Thanks. I am a little bit confused so appreciate your patience. So in the paycheck deduction calculator do you break out all your taxes and deductions as follows:
State Tax 1 (just as an example)
State Tax 2 (just an an example)
Or do you combine some of those things like Fed, Social Security and Medicare?
Also if you get a tax refund how do you handle that. Do you categorize it into one of the tax buckets are do you just show it as income and allocate to other areas in your budget?
No patience necessary. Good questions that are making me think harder about this. I do break everything out as you present them. I categorize them all as Gross Deductions and then I tag each one with the more specific label (Fed Tax, State Tax, etc.). But your question about how to handle a refund is an interesting one. As is, it would probably make sense to credit that toward the Gross Deductions category, but that’s kind of awkward. I’m going to think this through a bit more, but maybe I need a separate category for each type of deduction.
Why not follow the example in the Paycheck Deduction Transaction Generator doc? At least this is how I’ve typically seen it done.
And then a FederalTax refund simply gets categorized as FederalTax. A category report on FederalTax will reflect the actual FederalTax expense.
Description Category Tags
ACME Paycheck - Gross Wages Paycheck
ACME Paycheck - Net Transfer Out Paycheck
ACME Paycheck - Fed OASDI/EE (Social Security) SocialSecurity Paycheck
ACME Paycheck - Fed MED/EE (Medicare) Medicare Paycheck
ACME Paycheck - Fed Withholding (Federal Tax) FederalTax Paycheck
ACME Paycheck - WI Withholding (State Tax) StateTax Paycheck
ACME Paycheck - Bobs Health Insurance HealthInsurance Paycheck
ACME Paycheck - Bobs Life Insurance HealthInsurance Paycheck
ACME Paycheck - ACME Retirement System Pension Paycheck
ACME Paycheck - 401K 401K Paycheck
Yeah, I think that’s how I’m going to wind up doing it. There’s another example out there using the Paycheck Deduction Transaction Generator that simply uses the same “Gross Deduction” category for all of the deductions. There was something else I preferred in that example (the flow of expenses and transfers made more sense to me), but I think a hybrid of the two will work best. So, forget everything I ever said about tags.