Income Tax Payments & Credit Lines
Just moved over to new YNAB. Previously we set aside money for income tax installments by taking a % of each business draw and making a payment to a credit line that we use specifically for paying taxes. This helps keep the balance lower as we had a balance before for an initial tax payment instead of having it sit in a bank account.
However, the new YNAB counts it as a payment but when an installment is due, the new YNAB needs a category, and then allocates the say $1,000 to that category against that months spending. Is there a way to do both a category and keep the transferring to the credit line? Or should I take that credit line offline?
Thanks!
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Hi J. Kerr !
How is that credit line currently entered in your budget? It sounds like it may be a Tracking account (which is why the transfer would ask for a category). The funds in your checking account should be budgeted towards a "Tax Installments" category, so that when you enter the transfer to the Tracking account you can use that category.
If that's not how things are set up, let me know and we can take another try at it! :)
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Faness Thanks for the reply! Yes, currently it's tracking so I was wondering if it's just best to take it offline and create the budget category for Installments. Then I'm still paying it down and setting aside budget. Kinda close to that already.
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J. Kerr
J. Kerr said:
Yes, currently it's tracking so I was wondering if it's just best to take it offline and create the budget category for InstallmentsEven if you leave the account as a tracking account you still need the "Installments" budget category to track the funds you move from checking to the line of credit. So each time you enter business income into YNAB, you will move the percentage you need for taxes from TBB to your installments category. When you pay toward the line of credit, that is the category you will use. (As a disclaimer, I've never run a business, but personally I would leave it as a tracking account.)
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So, you're using new income to pay off past debt. And you seem to not be reserving cash for your upcoming taxes.
If you realize that and that's your choice, then so be it. Your budget, your priorities.
YNAB is a plan for your cash. That's why it wants you to budget for the debt reduction -- you're sending them your cash. That's why it also disappears out of the category/budget. Dollars can only be spent once.
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dakinemaui The income are business draws so no tax is taken off. The funds that are transferred are for income tax and the credit line is used only for tax, so the previous debt is previous tax payments from when the business was in it's early days a couple years ago. Should likely be paid off this year and then it will be in an out or we won't even use the credit line in that way anymore. It's more to get it right on YNAB so I think it'll be easier to take the credit online offline.
Thanks.
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