Dumb Bookkeeping Question - Income Tax Payments and Refunds
At tax time each year either I owe the government money or they owe me. The amount is usually a couple thousand dollars. I've been categorizing my payments as Financial: Income Tax and I budget for the expense each month accordingly. When I receive a refund should it be categorized the same or as Inflow: To be Budgeted? Or does it matter?
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I record mine as inflow: to be budgeted because I see it as new income. It's not like a return of merchandise to a store where I get a refund because those funds already existed in my budget and I'm getting them back. The tax refund is for a part of my income I never got. If that's making any sense.
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HappyDance , you make perfect sense. Thanks!
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HappyDance That does make sense! Thanks for that perspective.
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I haven't had to pay in a while, but I would put payments to Interest & Fees (I don't like too many categories) and refunds to To be Budgeted.
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I use my tax categories for all tax related inflows and outflows, one for Federal, one for state.
