Gross salary, taxes, taxable income and other deductions

PYohe

When entering income and deductions from salary and retirement income, shouldn't I have different categories for each person's income and taxes? Multiple fed tax categories and FICA categories (and others)

Example:
His gross salary + his federal + his fica, etc
My gross salary + his federal + my fica, etc
Otherwise the W-2s will not match up.

But, insurance deductions do NOT need to have different categories for each of us. I just need 1 medical, 1 dental, etc. Am I correct?


Another question...

Example:
Military retirement less Survivor Benefit Plan = Taxable Income

Taxable Income less federal and state taxes = net income

I know I need to enter Military Gross, SBP expense, fed tax expense, and state tax expense.

How do I enter the Taxable Income? Otherwise it won't match with the 1099-R.

Which tax lines do I need to check?

Is there a master list so I can see all of them at once?
Thanks

NotACPA

Gross Salary MINUS the various tax deductions MINUS any voluntary deductions equal Net pay.  And for any of those voluntary deductions that are contributions to a 401k/etc retirement plan, they should show in the Paycheck Wizard as having Square brackets around the name of that account E.G., [401k Account Name].  This is true for both paychecks.

Not sure what you were indicating by the use of +

And, citing Fed Tax w/h as an example, I have 1 Category .. but  His and Hers sub-cats.  Because on the IRS 1040, it all goes into the same place.

Boatnmaniac

Hi @PYohe .  Good questions.

For the paychecks, I suggest you consider using the Paycheck Wizard.  Go to Tools > Manage Bill & Income Reminders > Add > Income Reminder > at the bottom of the popup click on the link for "Paycheck Wizard" > Gross Amount > follow the prompts.  You can use the Paycheck Wizard twice, once for you and once for him.  It will create Paycheck Reminders for each of you with all the deductions that you enter, both pre-tax and post-tax.  The Paycheck Wizard is a pretty straightforward and simple tool to use...it will even assign the correct categories to be used so the paychecks are captured properly in the tax reports.

I'm not yet sure about the best method to proceed for the the military pension because of that SBP expense.  I haven't found a category and tax line item that can be tied to it so we might need to get creative with this one.  First, a couple of questions:

• It is my understanding that SBP expense is deducted from the gross pension benefit and not reported as taxable income nor is it a tax deductible expense...kind of like how 401K contributions are managed in the tax scheme of a paycheck but it is an expense instead of an investment contribution.  Is that correct?
• Also, while SBP might be a pretax deduction for Fed income tax it might or might not also be the same with regard to the State income tax.  Do you know if your state taxes the gross pension amount or do they also treat the SBP as a pre-tax deduction?
  

If you get back to me on these questions I can test out a couple of ideas to see if they'll work well with the Tax Reports and Tax Planner and then get back to you.

Oh, you also asked about where you can see all the categories:  Tools > Category List.  You can click once or twice on the Tax Line Item column header to bring all the tax related categories up to the top of the list.

NotACPA

Gross Salary MINUS the various tax deductions MINUS any voluntary deductions equal Net pay.  And for any of those voluntary deductions that are contributions to a 401k/etc retirement plan, they should show in the Paycheck Wizard as having Square brackets around the name of that account E.G., [401k Account Name].  This is true for both paychecks.

Not sure what you were indicating by the use of +

And, citing Fed Tax w/h as an example, I have 1 Category .. but  His and Hers sub-cats.  Because on the IRS 1040, it all goes into the same place.

Boatnmaniac

Hi @PYohe .  Good questions.

For the paychecks, I suggest you consider using the Paycheck Wizard.  Go to Tools > Manage Bill & Income Reminders > Add > Income Reminder > at the bottom of the popup click on the link for "Paycheck Wizard" > Gross Amount > follow the prompts.  You can use the Paycheck Wizard twice, once for you and once for him.  It will create Paycheck Reminders for each of you with all the deductions that you enter, both pre-tax and post-tax.  The Paycheck Wizard is a pretty straightforward and simple tool to use...it will even assign the correct categories to be used so the paychecks are captured properly in the tax reports.

I'm not yet sure about the best method to proceed for the the military pension because of that SBP expense.  I haven't found a category and tax line item that can be tied to it so we might need to get creative with this one.  First, a couple of questions:

• It is my understanding that SBP expense is deducted from the gross pension benefit and not reported as taxable income nor is it a tax deductible expense...kind of like how 401K contributions are managed in the tax scheme of a paycheck but it is an expense instead of an investment contribution.  Is that correct?
• Also, while SBP might be a pretax deduction for Fed income tax it might or might not also be the same with regard to the State income tax.  Do you know if your state taxes the gross pension amount or do they also treat the SBP as a pre-tax deduction?
  

If you get back to me on these questions I can test out a couple of ideas to see if they'll work well with the Tax Reports and Tax Planner and then get back to you.

Oh, you also asked about where you can see all the categories:  Tools > Category List.  You can click once or twice on the Tax Line Item column header to bring all the tax related categories up to the top of the list.

PYohe

LOL. I did not type what my brain was thinking! I meant post the gross, plus post taxes, and everything else. I did not mean to ADD the deductions. I even read the post again before submitting and still missed that! Thanks. That is what happens when you work too late at night.

I will use subcategories for deductions like taxes. I used hundreds of categories and sub categories with my last program, but I wanted to be lazy this time. W-2s will be off if I don't use sub categories. I can be lazy with my gasoline credit card.

SBP expense- I couldn't find a line item either. If I enter the gross amount and deductions in Quicken, I have to post the SBP somewhere.



We can exclude 75% of military retirement in Oklahoma.

Teacher retirement for Oklahoma says, "Retirement benefits from these sources can be excluded from Oklahoma income: Oklahoma Teachers' Retirement System " I assume that means all of it.


Last year's military 1099-R showed the same amount in box 1 (gross dist) and in box 2a (taxable amount).

The actual Retiree Statement shows gross pay less the SBP amount which should be Taxable Income.

The W-2 is using the Taxable Income from the YTD Retiree Statement. (after SBP is deducted.)

So Retiree statement matches the box 1 and 2a on the W-2.



Pre tax SBP tells me that the SBP will have taxes taken out every month if I ever have to draw it. So it is like a 401-K.

Oklahoma uses the amount on line 1 and 2 a, so it is taxed when drawing it. Treated like a pre tax deduction.


Whew! I now have a headache. I hate taxes and accounting.

So, I need to know where to post the SBP.
1. I can enter the gross and deductions and have an asset account for SBP that does absolutely nothing since I can't balance it or anything.

2. Instead of entering the gross amount, I can enter the Taxable Income and all the deductions. (gross minus SBP)

# 2 seems easier....but I don't know if I will need that Gross amount and the SBP amount in the future.



What to do? What to do?
Thanks.

Boatnmaniac

@PYohe - Sorry about taking so long to get back to you.  I've been exploring different ideas about how to capture the Military Pension (gross, taxable, SBP, Fed & State tax withheld) properly in the Tax Reports and Tax Planner and everything I've tried so far fails to be fully and properly captured as 1099-R income and expenses.

I think your option #2 might be what you will need to go with.  You can create new categories for the Pension (taxable amount, fed tax, state tax) and the Tax Reports will capture that data properly.  But Tax Planner does not capture it all.  If you plan to use Tax Planner you would need to use normal wage categories which will report it as W2 income and taxes, not 1099-R income and taxes.

A big part of the issue is that Quicken is a financial planning software, not a tax software.  As a result it is not very comprehensive.  It does an OK job of capturing the most common tax scenarios but it often falls short on the less common scenarios and your situation is one of the less common ones.

As you said, your option #2, also does not capture the SBP expense nor the Gross Amount of the Pension so how to manage that is still not clear to me.

If you tell me how you wish to capture the tax data (as 1099-R or as W2) I can provide you a suggestion on how to set that up.