Transfers in Reports
I have a transfer between two accounts that would be considered income for tax purposes. Since that category for this transaction is the transfer from/to account how do I add an income category to this transaction so it will show up in my income report?
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Support Staff 1 Posted by Ethan on Jan 29, 2022 @ 05:57 PM
Hello,
I think the main way to do this would be to create an expense and income category for this transaction. In the first account you would categorize this as an expense in that new category, and then in the second you would create a different transaction with the income coming from the income category.
If that doesn't seem to fit your situation, could you explain in more detail how this transfer is considered income? Like are you paying yourself from a business account that you also track in the same data file?
Ethan
Infinite Kind Support
2 Posted by tkksr on Jan 30, 2022 @ 05:30 AM
Hello Ethan,
I think you have misunderstood my issue. I cannot create an income or expense category for transfers between accounts because the category on transfers must be the account the transfer came from. A transfer from checking to savings has ‘checking’ as the category when looking at the transaction from the savings account and when looking at the transaction from the checking account it will have ‘savings’ as the category. How do I add “Rental income” in the category when it already as the account ‘checking/savings’ in the category.
Tom
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3 Posted by dwg on Jan 30, 2022 @ 06:03 AM
I'm a fellow user.
Ethan is suggesting that instead of using a transfer transaction you instead use two transactions, one in each account in the source account you enter a transaction with an expense category you specifically create.
In the destination account you create a deposit transaction with an appropriate income category.
Support Staff 4 Posted by Ethan on Jan 30, 2022 @ 11:19 PM
I think we're understanding the situation correctly. The issue is that by definition a transfer between two of your accounts is neither income nor an expense, which is why I suggested that sort of workaround.
I'm again wondering if you could explain your specific situation in more detail. For rental income, it seems like the initial transaction for this (coming into your checking account?) would be given the Rental Income category. Then your later transfer from checking to savings is just a transfer. I'm not sure if we can suggest much more without knowing more specifics.
Ethan
Infinite Kind Support
5 Posted by tkksr on Jan 31, 2022 @ 12:30 AM
I see now. So the answer to my question is “You cannot use categories when doing transfers”
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Support Staff 6 Posted by Ethan on Jan 31, 2022 @ 02:03 AM
Moneydance uses double entry bookkeeping principles as the basis for all of its accounting. In short, this means that each transaction is associated with the account the transaction is made in, and then either another account (in the case of a transfer) or a category (in the case of money entering or leaving your finances). One can also have a transaction split between multiple categories or accounts. But what you're describing would be having the same money moved twice, both into an account, and into an expense category. This is simply not possible from basic accounting principles.
Again, if you'd be willing to describe your specific situation we can potentially offer more detailed suggestions, but I think this is about all I can explain regarding the general way accounting works.
Ethan
Infinite Kind Support
7 Posted by tkksr on Jan 31, 2022 @ 01:28 PM
Thank you Ethan for further explaining how MoneyDance works. I’m not familure with accounting principles and thus have used Microsoft Money, Quicken and now MoneyDance for many years. I didn’t realize the similarities between categories and transfers but that makes sense. I would not want to have a transfer between accounts entered as two different transactions so I could set a category. That may cause some confusion as to where the money actually came from. I think the solution to my problem is to create an ‘income’ tag so I can include these transfers in my income report. Since these are repeating transactions it would be easy to include the tag in the transaction reminders.
Again, thank you for your help.
Tom
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System closed this discussion on May 02, 2022 @ 01:30 PM.