Escrow Payments showing as an Expense

I am using Money HB 2008 and I have an investment property and I pay the
taxes and insurance thru my mortgage payment. I therefore created a
separate escrow account and then as part of the monthly payment of the
mortgage I also show a transfer of the taxes and insurance into this escrow
account. The problem I have is that when I run any reports this transfer
does not show up as an expense but it should since I have really paid the
money to the mortgage company (even though the mortgage company has not paid
the money to the appropriate places).

Can anyone help me with this so my reports will properly reflect this
expense?

Thanks

--

Neil

The Transfer : [name of escrow Cash Account] isn't the Expense.

The Expense is recorded when you enter insurance or tax expense transactions
in the escrow account. If you aren't recording these transactions, the
"Escrow" Cash account will just grow forever.

"Neil154ABCD@gmail.com remove ABCD" <neil154@gmail.com> wrote in message
news:13e595f2j615j73@corp.supernews.com...
> Can anyone help me with this so my reports will properly reflect this
> expense?

I understand what you are saying but from a business point it does not work
that way.

Take the insurance and say that I pay $30 per month and I bought the
investment property in August of this year. Therefore at closing I paid
$360 for 1 year in advance. That $360 is showing properly as an expense
because it was not taken from escrow. Now the $30 per month that I pay will
not be "used" to purchase new insurance until July of next year yet I have
spent $120 ($30 for September, October, November & December) this year.
This $120 is a legitimate business expense for this year since I have paid
the money to the mortgage company. Yet this expense does not show up in any
report that I can create. The only way I can get it to show up is to use a
non business report which allows me to include transfers. If I include the
transfers the report then also includes the transfer for the payment of
principal on the mortgage which is not a business expense.

Any suggestions would be appreciated.

--

Neil




"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in
message news:uoV3W$h8HHA.1184@TK2MSFTNGP04.phx.gbl...
> The Transfer : [name of escrow Cash Account] isn't the Expense.
>
> The Expense is recorded when you enter insurance or tax expense
> transactions in the escrow account. If you aren't recording these
> transactions, the "Escrow" Cash account will just grow forever.
>
> "Neil154ABCD@gmail.com remove ABCD" <neil154@gmail.com> wrote in message
> news:13e595f2j615j73@corp.supernews.com...
>> Can anyone help me with this so my reports will properly reflect this
>> expense?
>
>

In microsoft.public.money, Neil154ABCD@gmail.com remove ABCD wrote:

>I understand what you are saying but from a business point it does not work
>that way.
>
>Take the insurance and say that I pay $30 per month and I bought the
>investment property in August of this year. Therefore at closing I paid
>$360 for 1 year in advance. That $360 is showing properly as an expense
>because it was not taken from escrow. Now the $30 per month that I pay will
>not be "used" to purchase new insurance until July of next year yet I have
>spent $120 ($30 for September, October, November & December) this year.
>This $120 is a legitimate business expense for this year since I have paid
>the money to the mortgage company.

Does your accountant go along with that? I would have expected that
a cash basis U.S. business would recognize the expense when it is
paid to the insurance company or for taxes, rather than when the
money was put into the mortgage escrow account that will later make
the payments.


> Yet this expense does not show up in any
>report that I can create. The only way I can get it to show up is to use a
>non business report which allows me to include transfers. If I include the
>transfers the report then also includes the transfer for the payment of
>principal on the mortgage which is not a business expense.
>
>Any suggestions would be appreciated.

If your objective is to have it appear as an expense at the time
that you put the money into escrow, enter it as an expense.

Cal - please see below

"Cal Learner-- MVP" wrote:

> In microsoft.public.money, Neil154ABCD@gmail.com remove ABCD wrote:
>
> >I understand what you are saying but from a business point it does not work
> >that way.
> >
> >Take the insurance and say that I pay $30 per month and I bought the
> >investment property in August of this year. Therefore at closing I paid
> >$360 for 1 year in advance. That $360 is showing properly as an expense
> >because it was not taken from escrow. Now the $30 per month that I pay will
> >not be "used" to purchase new insurance until July of next year yet I have
> >spent $120 ($30 for September, October, November & December) this year.
> >This $120 is a legitimate business expense for this year since I have paid
> >the money to the mortgage company.
>
> Does your accountant go along with that? I would have expected that
> a cash basis U.S. business would recognize the expense when it is
> paid to the insurance company or for taxes, rather than when the
> money was put into the mortgage escrow account that will later make
> the payments.
>

Yes, my accountant agrees. Since I have paid the amount to the mortgage
company and it is no longer in my control it is considered an expense at the
time of my payment.

>
> > Yet this expense does not show up in any
> >report that I can create. The only way I can get it to show up is to use a
> >non business report which allows me to include transfers. If I include the
> >transfers the report then also includes the transfer for the payment of
> >principal on the mortgage which is not a business expense.
> >
> >Any suggestions would be appreciated.
>
> If your objective is to have it appear as an expense at the time
> that you put the money into escrow, enter it as an expense.
>
How do I show it as an expense and still keep track of the escrow amount so
that it matches the escrow amount that the mortgage company shows?

Thanks for your help

First off, I'm with Cal in doubting your tax treatment. The fact that your
loan company wants to sit on your money till the bill comes due does not
mean it's an expense now.

But, if that's what you really want to do, then why even have the escrow
Cash Account? Just expense these things in the Loan Payment. Any
overage/underage will be taken care of as a function of future updates to
the escrow amount. And if you want to think of the transfer to the escrow
Cash Account as the expense, then what do you do when you have to enter
something--transactions to reflect disbursements to the insurance company
and to the tax man--to make the balance of that account go down?

As to your reporting problem, one way to deal with that would be to include
some text in the memo ("{transfer to escrow to be treated as expense here
and now}") of the transactions you want to report then customize some report
like account transactions to include transactions with that text.

"Neil154ABCD@gmail.com remove ABCD" <neil154@gmail.com> wrote in message
news:13e5u6p7r882jfa@corp.supernews.com...
> I understand what you are saying but from a business point it does not
> work that way.
>
> Take the insurance and say that I pay $30 per month and I bought the
> investment property in August of this year. Therefore at closing I paid
> $360 for 1 year in advance. That $360 is showing properly as an expense
> because it was not taken from escrow. Now the $30 per month that I pay
> will not be "used" to purchase new insurance until July of next year yet I
> have spent $120 ($30 for September, October, November & December) this
> year. This $120 is a legitimate business expense for this year since I
> have paid the money to the mortgage company. Yet this expense does not
> show up in any report that I can create. The only way I can get it to
> show up is to use a non business report which allows me to include
> transfers. If I include the transfers the report then also includes the
> transfer for the payment of principal on the mortgage which is not a
> business expense.

Thanks for your advice. I guess I am going to give up and record the escrow
payments as an expense. This will then stop me from keeping track of the
amount actually in the escrow account by the use of Money unless you have
some other suggestions.

"Dick Watson" wrote:

> First off, I'm with Cal in doubting your tax treatment. The fact that your
> loan company wants to sit on your money till the bill comes due does not
> mean it's an expense now.
>
> But, if that's what you really want to do, then why even have the escrow
> Cash Account? Just expense these things in the Loan Payment. Any
> overage/underage will be taken care of as a function of future updates to
> the escrow amount. And if you want to think of the transfer to the escrow
> Cash Account as the expense, then what do you do when you have to enter
> something--transactions to reflect disbursements to the insurance company
> and to the tax man--to make the balance of that account go down?
>
> As to your reporting problem, one way to deal with that would be to include
> some text in the memo ("{transfer to escrow to be treated as expense here
> and now}") of the transactions you want to report then customize some report
> like account transactions to include transactions with that text.
>
> "Neil154ABCD@gmail.com remove ABCD" <neil154@gmail.com> wrote in message
> news:13e5u6p7r882jfa@corp.supernews.com...
> > I understand what you are saying but from a business point it does not
> > work that way.
> >
> > Take the insurance and say that I pay $30 per month and I bought the
> > investment property in August of this year. Therefore at closing I paid
> > $360 for 1 year in advance. That $360 is showing properly as an expense
> > because it was not taken from escrow. Now the $30 per month that I pay
> > will not be "used" to purchase new insurance until July of next year yet I
> > have spent $120 ($30 for September, October, November & December) this
> > year. This $120 is a legitimate business expense for this year since I
> > have paid the money to the mortgage company. Yet this expense does not
> > show up in any report that I can create. The only way I can get it to
> > show up is to use a non business report which allows me to include
> > transfers. If I include the transfers the report then also includes the
> > transfer for the payment of principal on the mortgage which is not a
> > business expense.
>
>

Anything else that comes to mind ultimately has to deal with the problem of
recording the expense once. If you call it an expense when you send the
money to the loan company, you can't call the exact same thing an expense
when they actually spend that money.

"neil154" <neil154@discussions.microsoft.com> wrote in message
news:5D2FABB6-E495-4CBE-92EB-EB5D5780FF40@microsoft.com...
> Thanks for your advice. I guess I am going to give up and record the
> escrow
> payments as an expense. This will then stop me from keeping track of the
> amount actually in the escrow account by the use of Money unless you have
> some other suggestions.

I agree with you, any solution I come up with to keep the escrow would
probably result in doubling up on the expense and I really can't afford any
time away from my job in jail.

"Dick Watson" wrote:

> Anything else that comes to mind ultimately has to deal with the problem of
> recording the expense once. If you call it an expense when you send the
> money to the loan company, you can't call the exact same thing an expense
> when they actually spend that money.
>
> "neil154" <neil154@discussions.microsoft.com> wrote in message
> news:5D2FABB6-E495-4CBE-92EB-EB5D5780FF40@microsoft.com...
> > Thanks for your advice. I guess I am going to give up and record the
> > escrow
> > payments as an expense. This will then stop me from keeping track of the
> > amount actually in the escrow account by the use of Money unless you have
> > some other suggestions.
>
>

I just wanted to let you guys know that I double checked with my accountant
and he confirmed that the money "spent" into the escrow account is an expense
and fully deductable as if I sent it to the insurance company or government.
This is also true for non-business people who are itemizing their taxes.

"neil154" wrote:

> I agree with you, any solution I come up with to keep the escrow would
> probably result in doubling up on the expense and I really can't afford any
> time away from my job in jail.
>
> "Dick Watson" wrote:
>
> > Anything else that comes to mind ultimately has to deal with the problem of
> > recording the expense once. If you call it an expense when you send the
> > money to the loan company, you can't call the exact same thing an expense
> > when they actually spend that money.
> >
> > "neil154" <neil154@discussions.microsoft.com> wrote in message
> > news:5D2FABB6-E495-4CBE-92EB-EB5D5780FF40@microsoft.com...
> > > Thanks for your advice. I guess I am going to give up and record the
> > > escrow
> > > payments as an expense. This will then stop me from keeping track of the
> > > amount actually in the escrow account by the use of Money unless you have
> > > some other suggestions.
> >
> >