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How to handle Income / property tax monthly set asides

Mike_L

I want to set aside X amount in an account for Taxes each month. I want the funds to be an the account but not have them show as available for spending. Also, I would like the on line balance to not include taxes so that the online balance and current balance match.

Maybe I need to set up a separate tax account and then just do transfers from my main account, monthly?

what is the best way to handle tax set asides?

After 9 months of using Quicken, I think I am a solid novice +

Appreciate the advice. Thanks

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NotACPA

This sounds like a self-created Escrow account. Would that be an accurate description?

Have you (will you) create this account in real life?

And, please elaborate upon what you mean by "the on line balance to not include taxes"? I'm not following what you're trying to do.

q_lurker

I think you should explore the use of Savings Goals within Quicken. They are a way to create pseudo-accounts to set aside money for special circumstances.

The online balance is a number provided by your bank for your account. As such, is you move money in Quicken to a different set-aside account but do not do that with your real world account, you cannot get that sort of matching. Again, the savings goals feature is intended to ease that sort of comparison.

Mike_L

Appreciate both of your responses. My income goes into an account. I want to set aside a portion of the income each month to cover the annual taxes.

I was thinking of the savings goal. I have never used one but think I understand the concept. I didn't think the on line balance would match the current balance if i used the goal. I use the Balances to keep me straight. My Quicken has frequent problems getting transfers between accounts attributed to the correct accounts and the balance alerts me to the error and allows me to quickly correct. I need to study up on savings goals.

Unless i hear something else, I think I will experiment with the savings goals and come up with a way to easily identify savings totals to help me balance.

I suppose if it is a big enough issue for me, I suppose I could just open a tax account at the bank to handle the issue with an account transfer.

Really appreciate your responses.

Mike

NotACPA

@Mike_L But what taxes are you talking about? Real Estate? Add'l taxes due with your tax return? Or what?

Because aren't payroll taxes withheld from your paycheck? Those would be a Category, in Q, not an account or a Savings Goal.

Mike_L

I am talking about property taxes and "income" taxes due on my investments. I am retired and want to spread the taxes over the year - for now. Eventually, once I budget better, I can stop micro managing and I will simply have the FA send me the taxes when they are due. For now, they are just sending me a fixed monthly payment.

NotACPA

@Mike_L Thanks for the clarification. Savings Goals would be perfect for your needs.

The moneys "deposited" into the goals APPEARS to be removed from your account, but when you do an account reconciliation it "surfaces" for that action, only to disappear again when done.

I don't use them, but my understanding is that a Savings Goal has a 1-1 relationship with an account (presumably, banking) in Q. So you'd need to make all of your SG transfers to/from that banking account.

q_lurker

FWIW: My understanding is that you can ‘fund’ the goal from multiple accounts, but when you start spending those set-aside funds, you need to ‘return’ the set-aside amounts to the original accounts and spend from there.

So a savings goal for a house down payment could include money from his account, her account, and joint account. When it is time for the down payment, the savings goal is emptied with everything going back to where it is in the real world. The down payment then comes from whatever real world account you want.

How or how well Quicken tracks such set asides, I don’t know. Never taken SGs that far.

Mike_L

the fact that it is there at reconcilation is a winner.

Thanks

Mike_L

That will work.

Thanks

NotACPA

@q_lurker

"FWIW: My understanding is that you can ‘fund’ the goal from multiple accounts, but when you start spending those set-aside funds, you need to ‘return’ the set-aside amounts to the original accounts and spend from there."

A more complete response than what I said. But the complexity of tracking how much came from which account (and the need to return funds to the originating account) renders a single 1-1 MUCH simpler. BUT, I'd suspect that one could have multiple SG's with the same essential goal, which would simplify that tracking.