What is best practice for categorizing tax refunds?

DannyB

Not a big deal, but just wondering how the community handles state and/or federal tax refunds.

• Personal Income?
• A subcategory of Personal income?
• Excluded from Spending Plan?
• Excluded from reports?

What would you say is “best practice”

RobWilk

Mine (small amount, like under $130) was auto entered as a category of "State Tax" so I left it that way. It wasn't big enough to worry about needing to exclude it. Lucky me, same day this came in, my gym hit me with an annual fee (on top of the monthly fee) which ate up about half the state tax refund.

UrsulaA

I enter tax refunds as a sub category of personal income. Additional taxes paid for are tracked under spending in Taxes sub categories. I pay all my taxes through withholding now. Before I paid some estimated and back taxes, which I tracked.

DannyB

Update:

Like @UrsulaA I will categorize my refunds from state and fed as Personal Income>Tax Refund.

For now, I will exclude both from my Spending Plan and Reports and this year our refunds will be transferred to our Travel savings account and added to the Travel SG.

Coach Natalie

I personally just use "Personal Income" and don't see the need to narrow it down any further. I did owe taxes a few years back, though, and I used the built-in Expense Category for "Taxes". 🙂

DannyB

OK, I went ahead and made a contribution to Travel SG for the amount of the refund and, duh, my Spending Plan went red 🤪 … and of course it would since I had excluded the refund from the Spending Plan 🫣 … so now it’s included and SP is back in the green.