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Posted by Sam on August 22, 2006, 2:17 pm
Please log in for more thread options Thanks everyone!
R. C. White wrote:
> Hi, Sam.
>
> Bernie's suggestion is a good one.
>
> > Although I can add any number of line items to the income portion of
> > the paycheck split, I think they all will be considered as taxable
> > income by Quicken and hence my Quicken's total income will not match
> > with W-2.
>
> Yes, and no.
>
> The uninvested withheld amount being returned to you is, as you say, already
> included in your gross pay. The interest paid by the company is taxable
> income to you, but it is not salary income, it is interest income. It
> should be reported on Form 1099-INT, not the W-2.
>
> As Bernie said, you first need a voluntary withholding line in your paycheck
> entry to show the amount withheld. At the end of the quarter, first record
> purchase of stock, increasing your Stock Investment Account (by whatever
> name you choose to call it) and decreasing your account that Bernie called
> Waiting for Investment. Then, on your next paycheck, you will show a
> NEGATIVE amount withheld for the amount the company pays back to you,
> including interest. This entry might get complicated because of the
> interest that you will receive, but it is otherwise straightforward. You
> will have two "negative" lines, one for the uninvested withholding returned
> and one for the interest income. At the end of the year, the balance in
> this interest income category should equal what the company reports on the
> 1099.
>
> The interest you receive is income, but not "compensation for services
> rendered"; in other words, it is not a part of your salary or wages and will
> not be included in the Gross Pay shown on your W-2. It is Interest Income
> and, if it is more than $10 per year, your employer should furnish you with
> a Form 1900-INT, in addition to your W-2.
>
> When all the dust has settled at the end of the quarter (and the end of the
> year), your stock investment account should show the price you paid for your
> new shares; your interest income category should show the interest that the
> company paid you, and your Waiting for Investment account should have a zero
> balance. And your salary income category should show just the salary you
> were paid.
>
> RC
> --
> R. C. White, CPA
> San Marcos, TX
> (Retired. No longer licensed to practice public accounting.)
> rc@grandecom.net
> Microsoft Windows MVP
>
> > Thanks for your reply
> >
> > No, the company pays the interest and any remaining balance back to me
> > via the paycheck. Of course, the money was taxed in prior paychecks, so
> > it is not taxed in the paycheck it is returned in. So, in essense, I
> > need to add an after tax income to my scheduled paycheck transaction.
> > Although I can add any number of line items to the income portion of
> > the paycheck split, I think they all will be considered as taxable
> > income by Quicken and hence my Quicken's total income will not match
> > with W-2. So how do I add a non taxable income back to either my bank
> > account or to the paycheck splits?
> >
> > Bernie wrote:
> >> On 8/20/2006 6:00 PM, Sam wrote:
> >> > Please help me if you know a solution to this problem
> >> >
> >> > I have setup paycheck as a scheduled transaction. Some amount of money
> >> > is deducted (after tax) every paycheck towards employee stock purchase
> >> > plan. This is okay so far. At the end of a quarter, stock is purchased
> >> > and any balance remaining is credited back in the next paycheck. So
> >> > this credit is like an after-tax income. In order for my year end
> >> > reports to agree with W2, I need to capture this income. How can I
> >> > accomplish this within the paycheck feature?
> >> >
> >> > Thanks
> >> > Sam
> >> >
> >> You didn't say how you've set things up already, but here is how I think
> >> I would handle it.
> >>
> >> I'd setup an account to hold the cash that is waiting for investment,
> >> maybe called "Waiting for investment" and defined as a checking or
> >> savings account.
> >>
> >> In my paycheck, I'd have one of the splits be a transfer/deposit from my
> >> paycheck income to the "Waiting for investment" account.
> >>
> >> When you actually purchase stock each quarter just show the money coming
> >> from the "Waiting for investment" account.
> >>
> >> The final step depends on the specific details of how your company
> >> handles the money that was left over. That money was already taxed, so
> >> they can't be showing it as income on your paystub again. Probably they
> >> are just showing it as a balance in your "Waiting for investment"
> >> account and then adding your new deduction to that account. In that
> >> case you don't have to d anything! The amounts in your "Waiting for
> >> investment" will always be correct.
> >>
> >> If they pay you interest on the money waiting to be invested, then you
> >> will want to add that interest to the account, just as you would for a
> >> savings account.
> >>
> >> Hope that helps.
> >> Bernie
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