On 1/14/2023 1:07 AM, David T. wrote:
.........
As for counting as income, most paychecks I've seen list the
employee's gross income at the top, with contributions to tax-deferred
accounts listed as deductions from the gross amount. This is why I
placed deferred income under income; the income that my employer lists
at year end includes this deferred income. I can, I imagine, chalk
this up to another case of "their books, my books" (as in, "On their
books, it's income; on my books it's not."), but I'd be happy to
understand a little better.
The case of an IRA can be even more confusing, in that a person can
make IRA contributions entirely separately from income transactions
and have those contributions affect income at tax time.
David T.
This is accounting, not a matter of how to do in gnucash.......
You are too focused on the term "income"
We'll back a few years (decades) to when I was getting a salary check.
There would of course be a gross amount, but notice I am not saying
"income". There would be various deductions like you might expect, tax
withholding, insurance, etc. But there could also be additions! For
example, I was carrying 5 years group term, paying for four (deduction)
but also receiving "imputed income" for the first year (the company paid
for that, but the IRS considers the premium for coverage >$50,000 to be
income). BUT one of the deductions from gross was money going into the
401k (NOT counted as current income) and the company matched that (also
no counted as current income). THAT is what a 401k/IRA is all about,
deferring income.
Standing accounts ---- in the old days of pen and ink on paper the P&L
was created in the "closing the books" operation. All the income and
expense accounts would be closed into an account called "Profit and
Loss" and then that account closed to equity by whatever "net profit" or
"net loss" brought the Profit and Loss account to zero. AT THIS POINT
all the temporary accounts (like income and expense accounts) would have
zero balances and we are ready to begin the net accounting period. The
"standing accounts" are the accounts that were not closed to zero in
this process (accounts of types asset, liability, and equity.
You do what you want. But I would be considering "deferred income" to be
a standing account. I would not expect its ever increasing balance
(during the contributing and waiting years) to be appearing in total
income each year. It eventually does appear in income for a current year
when distributions are taken later in life. Because income accounts are
"really" temporary accounts of fundamental type equity, under equity is
where I would be keeping it.
BUT --- I am not an accountant. Do whatever YOUR accountant advises.
Michael D Novack
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