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Gross salary in paycheck split trasaction shows as income

jackcarliton

18 Sep, 2010 03:51 PM via web

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I am having difficulty setting up a split transaction for my paycheck. I set up categories for the tax deductions and have splits that deposit money into my savings account and retirement accounts. When i enter the split, I have to put all the numbers in the Increase column. Then the paycheck income category shows the gross as income. That isn't really my income since I don't see it or is that the accounting way of doing it? Does the paycheck income category show up in my net worth? I do not want it to. Any help is much appreciated. Please give me a step by step guide and what column you put your information in. Thank you.

1. 2 Posted by -Kevin N. on 18 Sep, 2010 05:30 PM

   

   Hi jackcarliton,
   I'm assuming that you're intention is to deposit your paycheck into your Checking account. Correct?

   It sounds like you may have inadvertently setup your Checking account as an Asset account instead of a Bank account. Your options in the Split window for $ amounts should be Payment and Deposit, not Increase or Decrease.

   In the Split window, you Gross Pay amount should be entered into the Deposit column, all other deductions (various taxes, IRA contribution) should be entered into the Payment column. The result should be your Net pay.

   If your are depositing your paycheck into your Checking account then it MUST appear in the Net Worth total on the Home Page. However if you were to create a separate Net Worth report, then you could Edit it to display whichever accounts or categories you wish.
   HTH -Kevin N.

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2. Support Staff 3 Posted by Angie Rauscher on 18 Sep, 2010 06:14 PM

   

   Jack,

   In accounting terms your gross pay should all be counted as income. The other pieces of the split (savings transfers, taxes, 401k deposits, etc) are more properly considered as expenses. The Net Worth is calculated based on the values of your accounts, not on the expenses or income (although clearly the balances of your accounts are determined in some part by your income and expenses). It is possible to customize the next worth report to exclude some accounts (or account types), such as if you wanted to calculate your net worth not including the value of your 401k. To do so from within the report, click the "Edit" button and change the accounts(s) included in the report to your specifications. You can also "Memorize" this report so that you do not have to manually change these preferences each time you run the report.
   

   I hope this helps, and please let me know if I can be of further assistance,

   Angie Rauscher
   Moneydance Support

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3. 4 Posted by jackcarliton on 19 Sep, 2010 12:38 AM

   

   Kevin,

   Thanks for the reply. I am trying to deposit my check into two savings accounts. My checking and savings accounts are set up as bank accounts, not asset accounts. Now I have a category called "paycheck". In that category there are split transactions that include the two direct deposits to my savings accounts, and the expense deductions for taxes and 401k stuff. These splits are in the "increase" column in the transaction in the "paycheck" category. The numbers work out in the separate accounts and categories but the paycheck category lists a positive balance of my gross salary.

   Are you saying that I should enter a transaction in one of my savings accounts, split it, and put the first split as a deposit in the amount of my gross paycheck amount? Then I would split out the various expenses in the payments column and also have one of the payments be a transfer to the other savings account?

   Is that correct? Thank you in advance for the help.

   A slightly related question would be what to do about 401k employer match contributions.

   ---

   Angie,

   Thanks for the accounting clarification. That makes sense now

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4. 5 Posted by -Kevin N. on 19 Sep, 2010 03:44 AM

   

   Hi Jack,
   Yes, deposit into one Savings account and through the Split, make a transfer to your other Savings account.
   See attached Split_Register.jpg it shows a Split paycheck deposit to Savings Acct 1 with Tax deductions, a transfer to Savings Acct 2 and a tranfer to a 401(k)
   Once you've set up the txn the way you like, right click it and choose :Memorize'
   This will create a Reminder with most of the info pre-filled. Fill in how frequent you want the Reminder to happen. This way you don't have to recreate the Split every paycheck
   See Split_Reminder.jpg
   Unfortunately, I've never experienced an Emplyer match to my 401(k) so I'll have to acquiesce to the Moneydance Support Staff to resolve that for you.
   HTH -Kevin N.

   • Split_Register.jpg 122.7 KB
   • Split_Reminder.jpg 54.1 KB

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5. 6 Posted by davier12 on 27 Oct, 2011 02:17 PM

   

   Perhaps I missed something on this issue. I too am having difficulity in resolving my budget for net taxable income. When I setup my paycheck I start with gross income, I then inpuit my deductions, some are normal deductions such as state and federal tax, etc. Some are not taxable such as 401k. When I run a yearly tax report I would expect to see gross income minus non-taxable deductions for net taxable income. Moneydance does not do this. It only list gross income and therefore overstates taxable income. A real problem when I try to file estimated taxes.
   This is how I have the accounts setup:

    Checking : Bank
   Federal, state soc sec med :  expense categories
   medical & dental insurance: expense category sub account  to salary                      (this is a pretax deduction and shows as a decrease to taxable income on tax report)
   401k : Investment  (all deductions from checking are transferred into this account and should be treated as a pretax deduction and therefore show as a decrease in taxable income. It does not.
   

   Am I missing something or do i have the accounts and categories setup wrong?

   Thanks Dave

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