Please help me if you know a solution to this problem
I have setup paycheck as a scheduled transaction. Some amount of money is deducted (after tax) every paycheck towards employee stock purchase plan. This is okay so far. At the end of a quarter, stock is purchased and any balance remaining is credited back in the next paycheck. So this credit is like an after-tax income. In order for my year end reports to agree with W2, I need to capture this income. How can I accomplish this within the paycheck feature?
You didn't say how you've set things up already, but here is how I think I would handle it.
I'd setup an account to hold the cash that is waiting for investment, maybe called "Waiting for investment" and defined as a checking or savings account.
In my paycheck, I'd have one of the splits be a transfer/deposit from my paycheck income to the "Waiting for investment" account.
When you actually purchase stock each quarter just show the money coming from the "Waiting for investment" account.
The final step depends on the specific details of how your company handles the money that was left over. That money was already taxed, so they can't be showing it as income on your paystub again. Probably they are just showing it as a balance in your "Waiting for investment" account and then adding your new deduction to that account. In that case you don't have to d anything! The amounts in your "Waiting for investment" will always be correct.
If they pay you interest on the money waiting to be invested, then you will want to add that interest to the account, just as you would for a savings account.
How is the surplus $$ that is credited back reflected on the W-2? Since it was previously taxed it would already be included in the reported taxable income, Yes/No? YMMV as I don't have Q2005 installed, but ...
... In Q2007's paycheck form there is a button labeled Add Earning that when pressed presents a menu of 'usual' income categories, i.e. Salary, Bonus, Profit Sharing, Vacation, Holiday, Sick Pay, and *Other Earning*. Choosing Other Earning presents an Add Earning dialog box with entry fields for; Name, Category, and Amount. Set up an income category that does not have a tax line item associated with it, so that it will not be included in the Tax reports or transfers.
I could be totally wrong about this though, so wait for more authoritative advise before acting on what I suggest.
Since it's after-tax, it's already been included in income and it doesn't get added to your W-2. I presume the money was held in an investment account. Just transfer the cash to where you deposit your check.
The uninvested withheld amount being returned to you is, as you say, already included in your gross pay. The interest paid by the company is taxable income to you, but it is not salary income, it is interest income. It should be reported on Form 1099-INT, not the W-2.
As Bernie said, you first need a voluntary withholding line in your paycheck entry to show the amount withheld. At the end of the quarter, first record purchase of stock, increasing your Stock Investment Account (by whatever name you choose to call it) and decreasing your account that Bernie called Waiting for Investment. Then, on your next paycheck, you will show a NEGATIVE amount withheld for the amount the company pays back to you, including interest. This entry might get complicated because of the interest that you will receive, but it is otherwise straightforward. You will have two "negative" lines, one for the uninvested withholding returned and one for the interest income. At the end of the year, the balance in this interest income category should equal what the company reports on the
1099.
The interest you receive is income, but not "compensation for services rendered"; in other words, it is not a part of your salary or wages and will not be included in the Gross Pay shown on your W-2. It is Interest Income and, if it is more than $10 per year, your employer should furnish you with a Form 1900-INT, in addition to your W-2.
When all the dust has settled at the end of the quarter (and the end of the year), your stock investment account should show the price you paid for your new shares; your interest income category should show the interest that the company paid you, and your Waiting for Investment account should have a zero balance. And your salary income category should show just the salary you were paid.
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