Zelle receipts automatically categorized as transfer category
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?
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"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.
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Thanks for your response, Tom. Unfortunately, I get that pop-up even though I'm trying to recategorize it to a different category. I would not recategorize to the same account.
Also, I am an accountant. Did public for 3 years (I should have noted that in my question). I was specifically asking what the entries were doing because I did not understand why changing the category would be booking to the same account and changing the balance. I'm glad I'm not crazy because you too believe that this should not be happening though it is happening for me.
I do not know how to proceed though because of this.
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Is there a way to see all the net balances of the transfers? One of the ways I liked to reconcile the transfer balance account in Mint was to make sure that it balanced to zero which is why I care about this. It ensures completion as well as accuracy. If this is not a report or a quick balance check, it will be slightly frustrating for me since it could be so easily done in Mint.
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"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."
I was trying to do this with recategorizing the zelle payments as the deposit to an account I specifically created to track the offsets. This is the issue I am having. In theory it should be simple but instead the recategorization is recording to Net Worth as you noted which ??????
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And when I use the term account, I mean it as an accountant does for the books, not bank account.
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I expect you know this but for clarity…
"Category" is Quicken-speak to what real accountants call "income and expense accounts" and "Account" is Quicken-speak for balance sheet accounts, though Accounts can function effectively as Categories that will appear in Spending Reports with proper customization of the report.
Off the top of my head I can't think of a standard report that shows all transfers, but you can create one. Select the Income and Expense by Category report, and Customize it. Under the Advanced tab select "include all" Transfers, under Accounts do "Select All", and under Categories delete all the income and expense Categories.
ADDED: Not that I expect anyone to really notice but I try to use "account" for real-world accounts and "Account" for Quicken Accounts.
Maybe you can post some pictures of what you're seeing? If I might not be understanding what you're saying here.
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I have the same question. Quicken auto categorizes Zelle deposits and withdrawls as a "transfers" from the same checking account that the Zelle transaction occurred in —- e.g. [BOA CHECKING XXX000]. Typically this type of catagorization refers back to another Account (like a payment for a credit card) and has a corresponding transaction in that account. Like Fumitay - I just want to know that if I change the catagory to an expense or income will it change a balance in the account that the "transfer" is listed for.
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Yes, it will change the balance of the other account.
Quicken's "Transfers" are "linked" between the two accounts.
If you are in "My Account" and have a transaction with [Other Account] as the "category" and change that to "Dining" the transaction in "Other Account" will be removed.
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@fumitay I think the main issue here is the difference between how Quicken does transfers vs. Mint. Quicken uses a special transfer category which is the "TO" or "FROM" account name in brackets such as [Checking]. So, if I wanted to Transfer from Checking to Savings, the Checking account would use category of [Savings] which is the "TO" account, and the Savings account would use a category of [Checking] which is the "From" account. That is why a transfer reconciliation report is not needed. The transfers would always net to zero because they are linked.
If the ZELLE is not a transfer, then you can change the category to whatever appropriately describes the withdrawal or deposit. If the ZELLE is a transfer then the category would be the "To" or "From" account in brackets.
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@fumitay I should have clarified that you would only need to enter one side of the transfer. Quicken then would automatically create the other side of the transfer in the other account.
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How to do this/fix this really depends on exactly what you want and when in the process you "step in".
The first question of the top of my mind would be how these transactions became linked transfers in the first place.
If you didn't do it, then it sounds like Quicken's automatic transfer detection kicked in, and if that is the case you should at least have set to confirm you wanted the two transactions to be changed into a linked transfer (from now on I'm just going to call them a transfer).
If you have a downloaded deposit in one account and a downloaded withdraw for the same amount around the same date this is a candidate for Quicken to kick in its automatic transfer detection/change the two transactions into one transfer.
Here are more details on that process.
Note the preferences for this is at Edit → Preferences → Transfer detection.
If one stops Quicken from changing this into a transfer, then you will still have two transactions. One in each account, that can be categorized any way you like, and as long as you don't change them into a transfer, the changes will not affect the other account. If you are going for the "double book" system where you just have offsetting "categories/books" then you don't want Quicken's transfers.
But let's step back a bit and talk about entering a transfer into an account manually. If I enter this into one of my Chase 0111 credit card account:
That will not only create this transaction, but in "Chris' Cash I will get this transaction (a transfer):
If I delete either side of this transfer, both sides will be deleted. Furthermore, if I change one side to a regular category that will break the "link" and as a result the transaction in the other register will be deleted.
This is why if Quicken has already changed your two transactions into a transfer, changing either transaction to a regular category will delete the other side. And unfortunately, there no "break apart" or "undo" for this.
A special not for this syntax:
I'm in "Chris' Cash" account and I enter this:
If you think of [Other Account] as the syntax for a transfer, then [The Account You are in] doesn't make much sense "A transfer to the same account". Quicken uses this nonsense syntax as a "Balance Adjustment" transaction. As in only affect the balance of this account not any other account or category (the amount comes/goes to somewhere outside of Quicken).
So, if one wants to categorize these transactions there are two important facts, you have to get in there before they are turned into a transfer. See the details above in my posted FAQ on automatic transfer detection. And you can't have it both ways, you now have two transactions, and each will have to be categorized in whatever way you see fit, but one can't be a transfer and the other a normal category.
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I should throw out why people want linked transfers in the first place. If you right click on a transfer you can select "Go to matching transfer" and it will take you to the other side of the transfer in the other account. Also, if you are doing the double book system you would most likely have tools to make sure that all your "books balance". Well, in Quicken "categories" are actually what would be "books" in that system, but there aren't any tools for "balancing books". Quicken is a personal finance program, not an accounting package. And this is one of the places that it shows up. The average person deals with income, expenses and transfers, not books. They reconcile "checking accounts".
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Thanks everyone for the help and clarification of what's going on in the background. Every accounting software has its quirks so this is a great help from people who know what's going on under the hood.
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Lol why do all my transfer transactions have "Go to matching transfer" unavailable. /facepalm
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As for Quicken not being good at reconciling accounts and not doing some high level versions of prepayments and accruals, that's a bit disappointing.
Mint did amortize expenses over time both for prepayments and accruals so … it's going to be really hard to get over losing Mint for me. >.<
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Internally to the database there are actually two transactions for the linked transfer with some kind of "link" that joins them. So, even though it isn't supposed to happen, I have seen times where the link in the database has been broken even if the transactions are still there. I'm not sure why all of your transfers would be in that state.
Most of Quicken is "cash basis" accounting, but the business edition can do accrual accounting. I don't use it, so I don't know much about it. The same I think goes for amortize expenses. I suggest for those you start another question so that it catches the eyes of the people that use the business version and can give you a better answer. I will say though that Quicken "business" isn't a full-blown accounting business system, it is geared to small businesses, mostly Schedule C or rentals.
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Certainly you can do accrual accounting in Quicken editions below the business product. A combination of manual asset and liability Account combined with custom Reminders works pretty well, not requiring a lot of manual intervention. Where Quicken falls down, below the business product, is in creating good subsidiary ledgers. You can fake those too, but it takes a bit of effort.
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OK…so I'm sorry to ask what may be another dumb question (or two)…but I totally new to Quicken these are my questions:
- The auto categorizing of the Zelle entries were for a "transfer" from the SAME account that the entries were in. In that case, if I changed them to an expense, I suppose nothing would happen since they are not linked as a transfer to/from another account?
- When I downloaded my checking and brokerage accounts, they had different limits on amount of histories that could downloaded. So there are withdrawal entries from checking (which were sent to the brokerage acct) that can't be linked to the brokerage account because the transaction is before the opening balance. Is there a way that I can somehow link them so it doesn't show up in my history as an "uncatagorized expense" and just a transfer of funds?
I can't thank you enough for any help. I'll been at this for hours…and feel like maybe I should start all over again setting up a new Quicken file : /
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#1 Correct.
#2 There are two ways to handle those transfers. The one you are probably looking for is a "balance adjustment", which is exactly what happened to you for #1. As in If you want money to appear/disappear from Quicken with only affecting the current account's balance then just use the [This Account] syntax in the category, where "This Account" is the name of the account you are currently in. The other way to handle this would be to just put the transfers in and then change the "Opening Balance" in the investment account to compensate. Note that again the Opening Balance transaction is just a balance adjustment with the same syntax. I know that there is such an entry that isn't zero, because the money to buys your securities had to come from somewhere.
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"The auto categorizing of the Zelle entries were for a "transfer" from the SAME account that the entries were in. In that case, if I changed them to an expense, I suppose nothing would happen since they are not linked as a transfer to/from another account?"
I've seen that sort of situation where a transfer between Accounts gets downloaded as two distinct "one-sided" entries. As I said you can't really depend on downloads to get the accounting exactly correct. And as I said previously, changing a transaction listed as a transfer to a Category will in change the balance in the Account, though it will delete the "other Accounts" balance.
"When I downloaded my checking and brokerage accounts, they had different limits on amount of histories that could downloaded. So there are withdrawal entries from checking (which were sent to the brokerage acct) that can't be linked to the brokerage account because the transaction
is before the opening balance."Quicken will happily accept a transfer transaction from the checking Account to the brokerage Account even if the date of the transfer is before the Opening Balance entry in the brokerage Account. You'd need to adjust that Opening Balance figure to keep the entire Account in balance, but it would result in "proper" reporting of real historical transactions.
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Thank you sooo much for this advise. Makes perfect sense and I will look at how I want to handle #2. You are the best!
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Personally, I have never seen a downloaded transaction be categorized at "balance adjustment", but that might be because I don't allow automatic categorization. I'm thinking this might be tied to something I have noticed when I had a USAA account. When they changed from Direct Connect to Express Web Connect + they started flagging all of their transactions as "transfers", even if they weren't transfers. Which is a very bad thing to do for Quicken because Quicken will put TXFR in the "check number/reference column" and that will lock the choices for the category to only transfers (the [Account] syntax).
So, I wonder if the same thing is happening here?
You will know it if the check number/reference number gets TXFR in it.
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