Hi @finances:
What a great question…Situations like this illustrate the natural tension between the Tiller Transaction sheet and double-entry accounting. Complexity can increase when you try to accommodate the idea of reporting debits and credits equally.
But Tiller offers a more simple, yet powerful solution: categorize the net of activity in your primary operating accounts-checking, savings, credit cards, etc. and allow your Balances sheet to report changes in the value of all other assets or debts.
For circumstances like this, I use a category called, Investment Transactions. The Investment Transactions category has no budget and is hidden from reports, assigned to the Transfer type. In keeping with your structure, In the illustrations following, I will use your category name, Transfer.
Given this, if you wish to only bring the impact of your net deposit into your budget, I would budget and categorize your four transactions this way:
$3,003-bank deposit (positive) Category: Income
$3,003.-IRA balance reduction (negative) Category: Transfer
$847 -IRA taxes (negative): Category-Transfer
$3,850-(positive) IRA Category-Transfer
If you want to budget and track the taxes as an expense, (preferred) you’ll need to budget and categorize the gross withdrawal amount as income instead of the net, like this:
$3,003-bank deposit (positive) Category: Transfer
$3,003.-IRA balance reduction (negative) Category: Transfer
$847 -IRA taxes (negative): Category-Taxes
$3,850-IRA (positive) Category-Income
Using either method, your IRA balance will be reduced by $3,850 on your Balances sheet, and the cash flow impact of your deposit in your reports will be measured at $3,003.
There are many ways to handle this, as you can imagine.
Does this help?
