Question about split transactions

R.C.

You hit it on the head. Quicken was written as a personal check writer, not a GAAP compliant double-entry business accounting package. Unless you're running a publicly traded company or have other business requirements, GAAP, depreciation schedules, salvage value, etal. will probably have little meaning for you.

I have an MBA in finance and 12 years in the "Big 8" (am I dating myself RC?) and have seen every chart of accounts scheme imaginable. I personally record sales taxes as a separate category for a couple of reasons.

Years ago they were deductible Schedule A items along with state and personal property taxes. It always reduced the tax bill by a coupleof hundred and I had detailed backup if I was ever audited.

I'm also curious how much I pay all the various government entities for the year. Sales taxes amount to a couple of thousand, on top of all the other taxes I pay the vultures. For some reason though, I never broke out all the taxes on utility bills -- talk about extortion.

Finally, it was easier for me to put taxes in a separate category than to try to apportion and deal with the taxable/non-taxable issues and different tax rates by municipality. Years ago if I made a purchase in one municipality and returned to the same merchant in another, I could be charged/credited at different tax rates. Also Quicken's crappy little calculator didn't help simplify the effort.

Am I GAAP compliant? Who cares? It's money out of pocket and Quicken lets me categorize it and report it any way I see fit. There is no right or wrong answer when it comes to PERSONAL finance.

sb

"R. C. White" wrote:

Thanks, Andrew! Right on!!!

I don't know how this ended up as a discussion about capitalizing stuff!!! A $25 game and a $35 program?

Maybe someone doesn't use the split function at all... but if you do extensively, as I do, what I was asking for saves me time. In some cases, I even want to keep record of the price I paid for different items (some of them in the same category) bought at the same time. Which is why "splits" were created! I might have 7 line items in the split window, or more! Actually, Q allows to have tens of lines!! And to add even more!

Well, how do you do it today? Do you multiple every item (let's simplify and assume that everything includes tax in this given receipt) times the sales tax %? If you have 7 line items, how many extra key strokes are we talking about? Let me tell you, the functionality of Money is really simple, and again, Doug, doesn't force you to use it!!! For me, it is much easier to add the price of the items from the receipt (which are pre-tax), and once I've split all the categories, allocate the remaining amount (after checking that all that is left is really the tax amount) proportionally among all the split items. It works great. And I'm sure more people would use this that some features that Q has implemented.

And related to the fact that some expenses are not taxable, I agree. I never used the "F6" key in Money to split my Costco bill into groceries and clothes. I calculated the easier one, applied manually the taxes to it, if applicable, and left the rest for the other category. I can do that in Q the same way as in Money

But please, don't get this into an accounting discussion. It is much simpler. I know that a lot of people adds sales tax to the same category of the item being purchased. If splits are a feature of the program, it just makes sense to give options for users to do things in a simpler way.

Doug, I remember where this started. I did it. And let me tell you, I never said anything about assets!! My question was how to categorize them, as an expense, NOT an asset, if someone wants to do it in the same category as the item being purchased.

I understand you are suggesting that I categorize sales tax. Fine. You go ahead and do it.

I won't. For a few reasons:

1. I've lived in Spain, Singapore and California. In Spain and Singapore, sales tax were never deductible. So there was no point in using that category.
2. I don't see the value in knowing how much I spent in sales tax. But I want to know how much I spent in things, including EVERYTHING that I had to pay in exchange of the given good
3. A lot of my expenses are in just one category. As I download the expense from my bank or credit card, I can assign the TOTAL amount to a category. Having to split every single entry in Q would be a pain so big that... I wouldn't do it :)

So, for those of you that do not care about sales tax as a category, and include the tax in the original category, how do you enter this transaction from Walmart?

- $35 in clothes for my kids

- $25 in clothes for my wife

- $30 in a cool accessory for my car

- $45 in a lamp to replace the one I broke last week

- $20 in replacement parts for my bike

- $13.56 in sales tax (8.75% in San Diego)

- $168.56 total

Do you type this?

- $35 * 1.0875

- $25 * 1.0875 .... and so on???

What I'm saying is: you type (or is downloaded) a total of $168.56. Then you type $35, $25, and so on, going thru your receipt. And when you are done, there is an unassigned value of $13.56. At this time, you press "F6", and all amounts are basically multiplied by 1.0875 (instead of you typing *1.0875 5 times, in this example).

Am I so crazy asking Q developers to look into this? Is this as insane as Doug suggests?

Hi, sb.

Yep. I spent only 2 years in the Big 8. Twenty years after my BBA, I enrolled at Cal State College San Bernardino for an MA in Administration with a concentration in Business Administration, not Public Administration. (Don't you love alliteration?) Just about the time I graduated, they changed Cal State College to Cal State University, and they changed my degree to an MBA.

Tax rules change every time Congress meets - and when Treasury adopts new Regulations or the IRS publishes new Rulings, Procedures, etc. - and often when some court somewhere decides that some rule or law has been interpreted wrongly. In the early 1960's, ALL state and local taxes were deductible on Schedule A, and we spent lots of time asking taxpayers about their cigarette taxes, gasoline taxes, auto licenses, etc. Then the rules changed: NO state taxes were deductible - except state income taxes - and then sales taxes. We tried for a while to record and/or reasonably estimate how much sales tax each client had paid; after the IRS published charts, we found that they usually were more generous than our calculations, so we stopped trying to do that for most clients. Remember, this was LONG before Quicken! Not one taxpayer in 100 had records to match what many of us have today. They couldn't even guesstimate how much they had spent for groceries or clothing or utilities or anything else (except their new car), with or without sales tax. So this kind of argument never happened in those days.

The point of that last paragraph: If you plan to keep your personal bookkeeping on the tax basis, you'd better be ready to revise your system often. And don't try to reason it out; just follow the bouncing ball.

AMEN!

RC

Hi Jose - please forgive me for beginning my comments, days ago, with the notion that you should not want to do that which you clearly want to do. Categorize anything you want any way you want.

Now - Jose68 wrote: > 2. I don't see the value in knowing how much I spent in sales tax. But > I want to know how much I spent in things, including EVERYTHING that I > had to pay in exchange of the given good.

Do you see the value in knowing how much you spent in state or local income tax, or property tax? Why do you want to know only some of your tax burden?

I live in the suburbs outside Washington, DC. I sometimes shop in Maryland, Virginia, and in DC itself. The sales tax regimes in all three are different. Only by categorizing sales tax can I have any idea what I'm paying.

One might very well expense the cost of a piece of software, but I certainly want to consider big-ticket, long-life purchases as assets in my Household Inventory account. Things like motor vehicles, living room furniture, photography equipment, or major electronics. For my own uses, Quicken is just as important for giving me an accurate Balance Sheet as it is for listing my income and expenses. Maybe more important.

enjoy Quicken, Doug

No need to apologize, Doug! And let me clarify my point about tracking sales tax. What I said is that I don't see the value in know how much I spent in sales tax. But that is me. I can certainly understand why some people might want to do it. But for me, it's just not worth it.

A large percentage of my transactions are single-category. If I were to track sales tax, most of them would be split categories, and it would just take more of my time.

Now, for big items, I actually, do something similar to what you do, and what other posters were saying. I transfer all the amount to an asset account, including sales tax, but I depreciate sales tax immediately. The difference is that, in "my books", that depreciation is in the category Auto:Depreciation, instead of Sales Tax. It works for me. I can understand how your way works for you.

But then we are back to square 1 :) If someone wants to allocate sales tax in a split for several categories, Q is not providing any help. And it would be an easy programming addition.

Anyway, thanks for the conversation! It's always interesting to read different points of view!!

Jose

Because your financial recordkeeping system should tell you what you need to know. When I used to deduct state sales tax on my federal return, I had a separate category for it, and, in this example would have just entered all the numbers from the receipt.

Now, I no longer track sales tax separately, and it's more useful to know what I paid for something, including the sales tax. So I also do the price*(1+ t) method. -- Jim

A long, long time ago, I used to take a gas station receipt that included gas and a car wash, and split it into two pieces: Auto:Fuel and Auto:Maintenece. Now, I have three kids, a house, and too many demands on my time. It goes in as Auto:Fuel.

A similar thing happens when I take a grocery store receipt and enter it as "Groceries." It may include dishwasher detergent, paper towels, tissues and what not, but I ignore that and just budget "Groceries" taking the above into account.

How this is done depends on what I want to learn from my financial records. That's probably different for different people. -- Jim

Jim, I agree. It all depends on how you want to track your finances.

Now I have another example that's bugging me. I have my TV, phone and internet with AT&T U-verse. The invoice is something like this:

U-verse TV - $79 Broadband - $35 Phone - $25 HD fee - $10 CA local video fees - $7.01 Federal Universal Service fund - $2 Sales Tax - $1.68

It is a pain to manually distribute the CA local video fees, Fed service fund and sales tax among my 3 categories: TV, internet and phone.

How do you guys categorize this in Quicken?

In MS Money, it was "easy". I input the total bill, the first 4 items, and the remaining amount (those $10.69) was magically and proportionately split among those 4 items. Do you all have a category for "Federal Universal Service Fund" or equivalent? Or for State video fees? Or even sales tax?

Thanks!!

For my telephone service, I use UTILITIES:TELEPHONE for the entire bill. For the cable people (like your example above), I use UTILITIES:CABLETV and implicit is that taxes and subservices (like internet fees which are part of the 'cabletv') are included. But it depends on what you do with your data. Do you really need to sub-analyze all the little pieces of a bill? Quicken makes it convenient (although in your case it doesn't have the ability to split a difference across categories as we've discussed), but at the end of the game, does one need to be so anal in that? If so, unfortunately, you need to do it manually. (Personally, I would never have a separate category for "Federal Universal Service Fund" or "State video fees". Why would I need to track it at that level? YMMV)

I suspect that the "local video fees" should apply only to the cable portion of the bill; and the "Federal Universal Service fund" should apply only to the phone portion of the bill. So I'm not sure spreading either of the two over all other split categories would be correct.

Hi Jose,

Here is how I do my AT&T Universe Bill. I basically looked at the detail of the bill to determine where the fees and charges below and have this as a memorized transaction. As the bill generally does not change (usually only the fees change) it works well for me.

Cable Memo: Uverse TV U300 $79.00 Cable Memo: Promotional Discount ($10.00) Internet Memo: Yahoo! Broadband Elite $20.00 Job Expenses Tag: Reimbursable Business Exp $20.00 Internet Memo: Bundle Discount ($10.00) Telephone:Residential $30.00 Telephone:Residential Memo: Promotional Discount ($5.00) Cable Memo: HD Technology Fee $10.00 Cable Tag: CA Local Video Service Fee $4.19 Cable Tag: CA Local Video Facilities Fee $0.50 Telephone Tag: Federal Universal Services Fee $2.00 Telephone Tag: 911 Emergency System $0.09 Cable Tag: CA Sales Tax $0.84

I do a similar breakdown of other bills (cell, electric, garbage, etc.). I used to enter tags on purchases, but found I never had enough to deduct so for the most part I have stopped tagging those transactions. The bundle discount probably could have been split between the Cable, Internet and Phone, I just lumped it under Internet as my choice.

-----Original Message----- From: Jose68 [mailto: snipped-for-privacy@gmail.com] Posted At: Tuesday, December 22, 2009 7:36 PM Posted To: alt.comp.software.financial.quicken Conversation: Question about split transactions Subject: Re: Question about split transactions

Jim, I agree. It all depends on how you want to track your finances.

Now I have another example that's bugging me. I have my TV, phone and internet with AT&T U-verse. The invoice is something like this:

U-verse TV - $79 Broadband - $35 Phone - $25 HD fee - $10 CA local video fees - $7.01 Federal Universal Service fund - $2 Sales Tax - $1.68

It is a pain to manually distribute the CA local video fees, Fed service fund and sales tax among my 3 categories: TV, internet and phone.

How do you guys categorize this in Quicken?

In MS Money, it was "easy". I input the total bill, the first 4 items, and the remaining amount (those $10.69) was magically and proportionately split among those 4 items. Do you all have a category for "Federal Universal Service Fund" or equivalent? Or for State video fees? Or even sales tax?

Thanks!!

tissues and

Sounds reasonable. And I guess that, since sales tax is not much, it's ok to just add it to the cable category. But I assume it should apply to phone and internet too, right?

I agree with John that spreading fees over all categories as I was doing was not the best way to handle it.

Thanks! I'll simplify it, and I'll follow your advise.

And I guess I'll do the same thing for G&E. I get a charge from "City of San Diego Franchise Fee Differential 1.03% Gas 5.78% Electric", which last month was $5.00, and I guess I'll need to split that between G and E. There are other charges that I was also spreading over both, but they can be identified as gas or electric easily.

I guess the "proportionately allocate difference" feature from Money was making me have some bad habits :) Although I also like that for sales tax allocation! ;)

Jose68 wrote in news:7e3426eb-3ff2-4b80-a2e2- snipped-for-privacy@x5g2000prf.googlegroups.com:

What I have done in a few cases is use the calculator when entering amounts in a split window. I would multiply each part that is taxable (for instance) with 1.07, since Jersey now has a 7% salestax.

Actually on my bill the CA Sales tax does only apply to the Cable portion - according to the second of the bill that provides the line of line itemization of the charges. So in my case, I would not split it out. I believe the tax is on the HD Tech Fee (although I think it is off a penny due to rounding).

-----Original Message----- From: Jose68 [mailto: snipped-for-privacy@gmail.com] Posted At: Wednesday, December 23, 2009 1:32 PM Posted To: alt.comp.software.financial.quicken Conversation: Question about split transactions Subject: Re: Question about split transactions

Sounds reasonable. And I guess that, since sales tax is not much, it's ok to just add it to the cable category. But I assume it should apply to phone and internet too, right?

I agree with John that spreading fees over all categories as I was doing was not the best way to handle it.

Thanks! I'll simplify it, and I'll follow your advise.

And I guess I'll do the same thing for G&E. I get a charge from "City of San Diego Franchise Fee Differential 1.03% Gas 5.78% Electric", which last month was $5.00, and I guess I'll need to split that between G and E. There are other charges that I was also spreading over both, but they can be identified as gas or electric easily.

I guess the "proportionately allocate difference" feature from Money was making me have some bad habits :) Although I also like that for sales tax allocation! ;)

There is a SPLIT command when you click on the assignment field. The $67 shows up on the top line. If you assign the first line to GAMES and $25, quicken puts the remaining $42 as unassigned. Then, you do software and finall the SALES TAX for $7 which is the remainder. Then you memorize the transaction w control M and it will save the amounts or as a percentage.