Escrow funds

trim83

My mortgage is paid off so I pay Property Taxes directly. Each month I transfer money from checking to savings to save for this. If I categorize this as an expense each month (which I want to do) the transfer into my savings account disappears. How can I get around this?

bmciance

You can't have a category on a transfer. If you want to record this amount as an expense each month you will need to "accrue" it. If you are not familiar, this is an accounting concept where you record an expense periodically (monthly in this case) and create a liability for it. Then when you actually pay it (quarterly) the liability is reduced to zero. You would have to create a liability account to do this (call it Taxes Payable or some similar name). Here are some sample entries for what you want to do:

Monthly:

1 - Transfer entry

Reduce checking account for monthly amt

Increase savings account for montly amt

2 - Set up liabiltiy and record expense

Increase liability account for monthly amt with tax category as expense

Quarterly:

3 - Transfer back to checking

Reduce savings account for quarterly amt

Increase checking account for quarterly amt

4 - Pay taxes

Reduce checking account for quarterly amt (check payment to tax authority)

Category for the payment is liability account (transfer)

In the end your checking account will be reduced by the amount of your tax payment, the liability account will be zero, savings wouild be zero (or back to what it was) and the expense would be shown monthly.

Hopefully this is clear. If not, post back any questions that you have.