How To Account for Taxes & Other Deductions From Salary

balthus

I crated a budget but used my gross salary so now I am off as my actual is my net direct deposit after taxes and other deductions. Should the revise budget to an approx net salary? It will fluctuate somewhat during the year as I hit 401k max, etc but seems like a better way to do than see gaping variance each month. Thanks.

jacobs

There's no easy way to deal with budgeting for net pay in Quicken Mac, because net pay doesn't exist as a category.

My solution has been to include the Tax category and other withholding transfers in the budget. That is, if I budget for my gross salary as well as the taxes and withholdings, then my actual and budget bottom lines will be comparing apples to apples. You can choose to budget all the sub-categories of Taxes (Federal withholding, Social Security, Medicare, unemployment, etc.), or you can omit the subcategories and just budget the the total. It's easier if you have a fixed salary and can accurately enter the values for the year, but even if your pay or withholdings change, you can probably come up with a pretty reasonable estimate to enter for budget purposes. You can also include in the budget any withholding for 401k contributions, by selecting to include Transfer to the 401k account in the budget. The goal is to include in the budget all the withholdings from your gross salary, so the bottom line budget and actual will align.