Double-entry bookkeeping: How to account for non-monetary taxable benefits received from employer?

Question

I'm trying to keep detailed books for my personal finances. One thing I haven't figured out how to represent is various non-monetary taxable benefits that I get at work. For example, a gift or a meal.

These count as "taxable income" at the end of the year (in my tax jurisdiction; I know it's not the case everywhere), so I'd like to actually track them in my double-entry bookkeeping system.

So when my employer tells me that something was worth X dollars, I can say that I got X dollars from an account like "Income:Benefits"... but where do I credit that money to? "Expenses:Groceries" or "Expenses:Restaurants" (as an example in the case of meals) doesn't feel right, since I never actually spent that money on food, and it messes up the tracking of my actual food expenditures. Even putting it in a new "Expenses:Benefits" account seems weird, and gives a misleading picture of how much I'm spending.

I'm guessing there's an established convention for this already? Any sources I could read up on to get ideas for this and similar practical questions that come up when bookkeeping?

Answer 1

I can say that I got X dollars from an account like "Income:Benefits"... but where do I credit that money to? "Expenses:Groceries"

Yes

doesn't feel right, since I never actually spent that money on food,

You did, didn't you? You got food.

I'm guessing there's an established convention for this already?

Doubt it. Established conventions in accounting are for businesses, and more specifically - public companies. So you can find a GAAP, or IFRS guidelines on how to book benefits (hint: salary expense), but it is not something you may find useful in your own household accounting.

Do what is most convenient for you. Since it is a double-booking system - you need to have an account on the other side. Expenses:Groceries doesn't feel right? Add Expenses:Groceries:Benefits or Expenses:Benefits or whatever. When you do your expense and cash-flow reports - you can exclude both the income and the expense benefits accounts if you track them separately, so that they don't affect your tracking of the "real" expenses.

Answer 2

I prefer to use an Income:Deductions account. Under this name you can go as detailed as you want, but the idea is this allows you visibility the way you need.

All your taxable income comes under Income:Taxable including your benefits. Any other non taxable income like gifts or cash backs or even non taxable income from the same employer goes under Income:Whatever account.

The benefit is it fulfils all your reporting requirements. If you want to report to the Taxman you would only look into Income:Taxable. If you want to know what spendable income you received in a year you query all Income subheads including taxable, non taxable and deductions. This would report the income you actually received in your bank account and hide the money your employer, in a way, deducted from your income to provide you those non monetary benefits.

This would also not pollute your expense accounts, they will continue to reflect the money you spent willingly from the money you had in your bank accounts.