Transfers In Category

jtgostars

Why are Transfer Ins reported as Income in my Budget? Or is it best to not include any transfers between accounts in a budget because in reality it's not a decrease in assets? I was trying to use it to maintain a "budget" for the balances I have in certain accounts

Tom Young

You can choose to use Transfers as a form of "income" - FROM (Account name) - or a form of "expense" - TO (Account name) - as you see fit.  This applies both to Budgets and Reports.  Of course you're correct that a Transfer isn't really an income or an expense, it amounts to moving money from one Account to another Account, a transaction that doesn't affect your net worth.  Even so, using Transfers within budgets and reports can make sense, depending on how you want to construct your budget.

For example, when I was using Quicken budgets regularly I wanted to budget only activity in my non-retirement Accounts since that was my main day to day focus, and my actual transfers between non-retirement Accounts and retirement Accounts amounted to only a handful per year.  Accordingly, no activity inside retirement Accounts were shown in my budget or my budget report.  Only the handful of transfers between non-retirement and retirement Accounts, ("contributions" and "distributions") were included included in the budget and budget reports.

As to your question of "why are Transfer Ins reported as Income in my Budget?", the answer to that relies in the way you've set up the budget.  Over in the budgeting module click on "Manage Budget Categories" and click on "Transfers in" and "Transfers out" and see what transfers are selected.

Frankx

Hi @jtgostars,

On the question of whether one should include transfers in a budget - there are strong opinions that on both sides of that question.  I think it comes down to personal preference.

My preference is to not include transfers because I view a budget as a tool to measure my ability to control my spending (primarily) and income.  Others want to see their transfers as well, but to me transfers really don't mean much and in fact distort the budget. 

But I do also want to "control" my account balances so that they have enough in them on an on-going basis.  I do that through the "Alerts Center".  There, I simply set-up minimum and maximum accounts for my various accounts.

Hope this helps.  Let me know if you have any followups.

Frankx

jtgostars

Thanks Frank, given the fact I don't have income per say (I'm retired and using my retirement savings to live off of) I was trying to have something in the budget to help me control how much I take from there on a monthly basis and to give me a single source for seeing and controlling how much I am spending and how much I withdrawing from my retirement funds.

Frankx

@jtgostars

Completely understood!  That's why Baskin Robbins makes 31 flavors...

Frankx

Chris_QPW

The biggest problem I see with transfers in the budget is the fact that it is all or none.
This is the same problem I have with the tax line setting of a withdraw from an IRA.
Doing things like IRA to IRA transfers mess this up.

If you use that account for any other purpose then it doesn't come out right.  If the account is dedicated to that one purpose, then it should be fine, provided of course that you don't account the money some other category.

Another way to approach the problem is not to budget "income" at all.
In other words if you figure up the amounts you get from say social security and transfers from your retirement accounts and then budget your expenses to that then whenever your actuals exceed your budget you know that you are spending that much more from your retirement accounts than you planned.

Note that I recommend using the projected balances for the cash flow part of this (making sure you in fact have transferred enough to cover them).

Tom Young

"The biggest problem I see with transfers in the budget is the fact that it is all or none."

Maybe I'm misunderstanding what you're saying here. 

I've had selected transfers - certainly not all of them - showing up in my budget (when I used the Quicken budgeting process) and in the financial statements I prepare each month end for years. 

With a little fine-tuning of the Accounts and Categories you see exactly the transfers that you want to see, not every single transfer that happens between Accounts,

The tax reporting aspect of IRA to IRA transfers is a separate matter.  If neither IRA is selected as feeding the budget or report then you won't see that transfer show up as income or expense in either place.  As far as having that transfer show up in a tax schedule you can change the tax attributes for such a transfer in the Account to a blank line, or deselect that Account in the Tax Schedule report.

Chris_QPW

Tom Young said:

"The biggest problem I see with transfers in the budget is the fact that it is all or none."

Maybe I'm misunderstanding what you're saying here. 

The transfers are "account based".

If I select a given account EVERY transfer out (or in) of that account will show up in the budget.  If you have transfers for other purposes then it isn't going to work out.

As an example say you have set the transfer out of your IRA account as your "income" (the FROM transfer settings), and have a transfer to your checking account.
Now you decide to move some of that money from that IRA account to another IRA account.  This transfer will also show up in the budget as "income".

And yes the IRA tax line is a "separate matter", but they both have the same problem, they are account based, and for that matter one account.  As in you can't say "count only the transfers from account A to account B".  And you can't say count this transfer, but not that one.

Chris_QPW

Actually now that I think of it you can "sort of" do the "count only the transfers from account A to account B" now that I they have added filtering by account.

To ignore transfers between the IRA accounts you can just take them out of the accounts you select.  You can even take the one that is supplying the money out of the budget.  Only the account that is getting the money needs to be in the budget.

That at least handles this problem.

Tom Young

"As an example say you have set the transfer out of your IRA account as your "income" (the FROM transfer settings), and have a transfer to your checking account.

Now you decide to move some of that money from that IRA account to another IRA account.  This transfer will also show up in the budget as 'income'."

Well you can have that happen, but set up properly it won't.

The transfer to the checking Account shows as income, the transfer to the 401(k) doesn't show as income.  You deselect the two retirement Accounts from the Accounts that feed the report but do have the two retirement Accounts selected as Categories.

Chris_QPW

Note I was thinking of the budget not the reports (the reports are much more customizable), and I had also forgot that you can now filter the budget by account, which you couldn't do before and would have caused the problem I mentioned.

Bob_L

I handle that transfer issue via a tag called "exclude from budget" that I assign to a transaction I want to exclude.  My current budget report is customized to include all tags and no tags but with the "exclude from budget" tag not checked.
 I realize this won't work on the Planning budget tabs, but I pay little or no intention to them anyway.