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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      • JohnH
      • JohnH
      • 2 yrs ago
      • Reported - view

      HappyDance , you make perfect sense.   Thanks!

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      • Dazed
      • and a little less confused
      • dazed
      • 2 yrs ago
      • Reported - view

      HappyDance That does make sense!  Thanks for that perspective.

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    • eloquentz
    • Numbers Wizard (Accountant), Acoustic Artist (Musician) and Jill of all Trades (Wife & Mother)
    • eloquentz
    • 2 yrs ago
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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.

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