Why do before-tax deductions in paycheck wizard use income categories?

sbaird32
sbaird32 Member ✭✭
When adding before-tax deductions in the paycheck wizard, Quicken defaults to using income categories (such as "Employer Benefit:Medical"). The resulting transaction has a negative amount for this category. Why not just use an expense category with a positive amount instead?

Best Answer

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 12 Accepted Answer
    The categories used for before tax-deductions need to be associated with the appropriate income tax line item to reduce the reported income appropriately.  The deduction will be a negative amount whether we use an Income or an Expense category.

Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 12 Accepted Answer
    The categories used for before tax-deductions need to be associated with the appropriate income tax line item to reduce the reported income appropriately.  The deduction will be a negative amount whether we use an Income or an Expense category.
  • sbaird32
    sbaird32 Member ✭✭
    edited October 12
    TIL, a given category can be applied to either income or expense transactions. That's fine I guess, except now I'm questioning the real distinction between income and expense categories. I'll get there.
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    Maybe an example will help.

    Say I buy a coat, and put it in the category Clothing (which is an expense category), which is a withdraw.
    Then I decide to return it.  I want it back in the same category so that if I was budgeting for $200 for Clothing I will get that amount back, and can spend it on something else.  So this is a deposit (basically a negative expense, which is "income").

    The primary use of the category is Clothing/expense, but the money can move in the opposite direction.

    The same is true of the tax line information.  You are getting $XXX in income, but you are also getting deductions that reduce that by $YY.
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  • sbaird32
    sbaird32 Member ✭✭
    True enough. I wonder why not also handle income taxes that way?