How to post tax items from previous year?

I just made my contribution to my HSA for 2021. It shows up in my register as a transfer which took place on 1/10/2022. In the past I've always changed the date of the transfer for anything that needed to "counted" in the previous tax year to 12/31/XXXX (2021 in this case). Then in the memo I would put transition actually took place on 1/10/2022. Is there any other more elegant way of doing this?

Answers

  • jacobs
    jacobs SuperUser, Mac Beta Beta
    More elegant, yes... but more complex. ;)

    I have an Asset account I call "Exchange" which I use for anything where there is a time shift or time split in the completion of the transaction. For instance, if I buy theater tickets for us and friends on December 28, and the friends repay me on January 5, I use this account to deal with the split across months and years. For the December purchase, the transaction amount is what I paid in total, and I split the transaction with half going to my entertainment expense category and have going to a transfer to my Exchange account. When I get paid back, I record the deposit transaction as a transfer to Exchange, zeroing out the asset account. When I had a lot of reimbursable expenses for work, I did the same thing: record the purchase as a charge to the Exchange account, and the reimbursement payment as a credit to that account. I also sometimes use the same approach if I had a large purchase near the end of the year which was returned, but the credit wasn't received until the following year.

    In your case, there actually is no transaction in December, but you can create one out of thin air. Create a transaction in your with an amount of $0, and two splits: the category you use for your health car contribution is the amount you contribution and a transfer to the asset account is the negative of the amount you contributed. Here's what that looks like if I enter it in my checking account:



    The first split creates the expense; in a checking account, that's a negative amount. The second, offsetting split transfers a positive amount to the asset account. Then in January, when the actual charge is posted, you enter the transaction is an expense, with the category being a transfer to Exchange:



    This takes the actual money out of your bank account, but doesn't create any expense in 2022; the transfer to Exchange brings the balance of that account back to zero.

    There are variations you can do on this approach — you could alternatively make the account a Cash or Liability account in Quicken; you can name it whatever you want (accountants often call it a "suspense" account).

    It sounds complicated, but it's not; however, it may not be worth if you have a single transaction each year. But if you find some other uses for "time-shifting" expenses (e.g. the time you actually pay is not the month or year you want the expense to count for) or being reimbursed for payments you make which are not actual expenses for you, you might find having such an account a useful tool to use.
    Quicken Mac Subscription • Quicken user since 1993
  • mmoran
    mmoran Member
    Thanks for your quick, interesting and clever response. What if.....

    The first category isn't actually Health Insurance but a transfer. Technically I'm transferring $ from my checking Acct into my HSA (Health Savings Account) it's not actually an expense. I'm assuming the first line in your example would then be Transfer:[HSA] not Health & Fitness:Health Insurance?

    IE., Would a transfer still work in your "time-shift"
  • jacobs
    jacobs SuperUser, Mac Beta Beta
    Sure, it would work as a transfer rather than an expense, because you want to show the money coming into the HSA account in December, but the money going out of the checking account in January. 

    There's another (and simpler) way you can do this, although I like the way I've already explained better. In December, enter a deposit/money in transaction in your HSA account, and use Category = Transfer. In January, enter a withdrawal/money out transaction in your checking account, and again use the Category = Transfer. The "Transfer" category is a special category in Quicken, because it doesn't count as income or expense. It's a way of recording a transaction to say "money came in from/went out to somewhere I'm not tracking in Quicken." So this eliminates having the asset holding account. But that's why I don't like it as much; if you enter one transaction correctly and forget to record the other, you've made money appear or disappear. If you accidentally use different amounts, money appear for disappear. I guess because I kept the books for a business for many years, I'm averse to anything which makes money appear or disappear without consequence; that's why I like using the holding account to I can see as of any date in time what was owed or pending. 
    Quicken Mac Subscription • Quicken user since 1993