Zelle receipts automatically categorized as transfer category

fumitay

I want to recategorize the zelle transactions in my bank account but I get a warning that doing so will record a transfer back into the same account. I know that if I change the category, it will change the bank balance in Quicken, which is bizarre.

What is going on in the background when you change one of these transactions that Quicken has determined to be a transfer? How do I stop Quicken from categorizing these transactions as transfers? What is being recorded when I categorize something? Does this recording only happen for transactions determined to be transfers in Quicken? Why does this question not pop up when recategorizing something else?

For ex, this is someone paying me back for a purchase I made for them. I want to create a net effect of these transactions categorized in one category where I take the cash received and the cash paid into the same category to ensure that the balance is zero (this is what I did in Mint). Why is this not possible in Quicken? How do I make sure this purchase I made on behalf of the other person doesn't get recorded as an expense against my budget?

Tom Young

"I want to recategorize the zelle transactions in my bank account but I get a warning that doing so will record a transfer back into the same account."

That will happen if the entry in the Category field is the name of the Account, surrounded by square brackets, in which you are making the entry: [Name of Account]. Is that, in fact, what you're doing here?

"I know that if I change the category, it will change the bank balance in Quicken, which is bizarre."

I do not understand that sentence. Changing a Category in an Account will not affect that Account's balance. Now if you are speaking about changing a transaction that's a Transfer to/from another Account by replacing the Account Name in the Category field to an actual Category, that won't change the balance in the Account you're working in but it will change the balance in the offsetting "from" or "to" Account Name that was there previously.

"What is going on in the background when you change one of these transactions that Quicken has determined to be a transfer?"

At its beating heart Quicken is simply an Accounting Program, and in "double entry accounting" every entry has to be a balanced entry, meaning that if you make a $100 entry in an Account then that $100 has to be "balanced" by an offsetting entry or offsetting entries in other Account(s) and/or Category(s) that come to that same $100 amount.

So for example if a transaction gets recorded (notice the passive voice here; you aren't making an entry, Quicken is making the entry) in your checking Account as a $100 deposit with the offset being a reduction of your Zelle Account, but you change that to some income Category say, the reduction in your Zelle Account goes away and the income Category you used gets increased by $100.

"How do I stop Quicken from categorizing these transactions as transfers?"

You have to understand that any Category or any Account that Quicken "fills in for you" when you download entries to non-Investment Accounts is simply a guess, and maybe a bad guess. You have to understand that Quicken can't "do your accounting for you", it helps "you do your accounting."

There are lots of things you can do here. You might look at Edit > Preferences > Transfer Detection and make changes in that area. You might set up memorized payees such that if a particular payee is generally associated with a specific Category Quicken can make more accurate guesses. You might cease allowing transactions to be automatically entered into Registers (my guess as to how you have things set up) and instead have downloaded transactions show up in the Downloaded Transactions window. That approach means that you're actually looking at transactions as you accept them one by one into the Register, making sure the Category field is correct, in real time.

"Does this recording only happen for transactions determined to be transfers in Quicken? Why does this question not pop up when recategorizing something else?"

I think you're referring here to this warning?:

As I said this ONLY happens when the "offset" to an entry that you're making is the SAME Account in which you're making the entry. This type of entry will "magically" change the balance in that Account but will NOT affect any other Account or Category in your file. This kind of entry is frequently referred to as a "self-referential" entry or a "one-sided" entry. That last name might be confusing you because I told you that every entry had to be a BALANCED entry, and, actually it IS a balanced entry. The offset to this kind of entry is to your Net Worth. That's a legitimate "Account" in personal finance, it just happens to be an Account that you can't see in your file.

"For ex, this is someone paying me back for a purchase I made for them. I want to create a net effect of these transactions categorized in one category where I take the cash received and the cash paid into the same category to ensure that the balance is zero (this is what I did in Mint). Why is this not possible in Quicken? How do I make sure this purchase I made on behalf of the other person doesn't get recorded as an expense against my budget?"

Of course you can handle this in Quicken. You either record the payment as an expense against a Category and when you get repaid you offset the deposit as a reduction of that same expense Category or, better, you split the payment as your portion going to that expense Category and the other portion going to a balance sheet Asset Account (a "receivable") and then when you make the deposit the offset is to this Asset Account, zeroing it out.