Service Fee Taken Out of Paycheck Before Deposited--How to Account in YNAB?
I use Upwork to get paid from clients since I freelance. Upwork takes out their service fee before paying me and putting the money in my checking account. Is there a way to account for this in YNAB? Upwork is not an institution I can link into my accounts.
Is there a reason you’re budgeting gross income (or partial gross?) instead of net income?
If I were in your shoes I would only budget the net paycheck you receive. If you’re set on accounting for it you could set up an ‘Upwork Service Fee’ Payee and budget your gross paycheck and then an outflow to the service fee payee.
Reflect the reality of what happened. For example, you received $1200 "income" (before the fee) and were charged a $200 fee. Enter a split transaction in your checking account:
- Net: $1000 (what actually hits the account)
- Split 1: $1200 inflow categorized as Inflow:To Be Budgeted
- Split 2: $200 outflow categorized as Upwork Fee
You should immediately budget $200 of your income toward the Upwork payment.
That all being said, most would simply track the net income in YNAB and rely on a statement from Upwork for the gross at tax time. It's just simpler and less prone to mistakes.
Lavender Jackal said:
include a new Upwork account that shows the service fee amount only.
Just a note to say that in YNAB an account is a physical place where money is (or loans). For example a bank account, a credit card account.
WHAT the expense is uses a category.
I am just detailing this because it gets confusing when trying to get answers if someone uses terms we aren't familiar with or have a different understanding. I am an accountant so I get where you are using account but in YNAB that is incorrect.