Dividing a loan payment between two parties

[Mr.Jan]

My girlfriend and I have purchased a house together and are equally on
the mortgage. We make one payment to the mortgage holder from our
joint checking account (as well as utilities, etc) and track
everything in an excel spreadsheet.

I want to set up a loan account and use TAGs to show our respective
payments. I would set up one loan account and be able to allocate
interest, principle, and escrow to each party.

It looks like all I can do is set up two identical loans for 1/2 the
amount borrowed. The only real downside is that it gives me two
payment entries instead of one. Still, I would like to find a way to
only have one payment amount and let Quicken allocate it. Any
thoughts?

Thanks

Jan

 

[Han]

My girlfriend and I have purchased a house together and are equally on
the mortgage. We make one payment to the mortgage holder from our
joint checking account (as well as utilities, etc) and track
everything in an excel spreadsheet.

I want to set up a loan account and use TAGs to show our respective
payments. I would set up one loan account and be able to allocate
interest, principle, and escrow to each party.

It looks like all I can do is set up two identical loans for 1/2 the
amount borrowed. The only real downside is that it gives me two
payment entries instead of one. Still, I would like to find a way to
only have one payment amount and let Quicken allocate it. Any
thoughts?

Thanks

Jan

You have a joint checking account, but still want to allocate payments to
your mortgage holder 50:50? It seems that at the end of the (year or
mortgage or relationship) all you have to do is divide the total payments
by 2 and voíla, there are both your shares. Same with a running total.

Probably you should get qualified professional advice regarding a tax and
legal problem, just to be sure there won't be hassles some time later on.

 

[Mr.Jan]

That is a way of doing it but I was interested in finding a way of
splitting that transaction.

One issue is that we tend to make unequal contributions to the
checking account.

1. We are on different pay cycles.
2. We allocate our paychecks differently.
3. We like different levels of "cushion" in the joint account.

What I want to do is run a report on the TAGs that show how much of
the checking account is "mine" and how much is "hers". I already do
this in EXCEL but I should be able to do it in Quicken. Obviously,
cable, electric, water, etc. is easy to record as a split transaction
with percentages but I wish there were a different way to split the
loan and still get the LOAN functionality of Quicken.

This is not really an accounting question. It is a bookkeeping/Quicken
functionality question. We have been doing this for years in our
spreadsheet and it works fine.
Thanks

 

[Han]

That is a way of doing it but I was interested in finding a way of
splitting that transaction.

One issue is that we tend to make unequal contributions to the
checking account.

1. We are on different pay cycles.
2. We allocate our paychecks differently.
3. We like different levels of "cushion" in the joint account.

What I want to do is run a report on the TAGs that show how much of
the checking account is "mine" and how much is "hers". I already do
this in EXCEL but I should be able to do it in Quicken. Obviously,
cable, electric, water, etc. is easy to record as a split transaction
with percentages but I wish there were a different way to split the
loan and still get the LOAN functionality of Quicken.

This is not really an accounting question. It is a bookkeeping/Quicken
functionality question. We have been doing this for years in our
spreadsheet and it works fine.
Thanks

I could do something like this in a test. From the loan account (!!!)
enter the payment amount as a deposit, let's call it Mortgage and assume
a total of $2000. Then split this 40:60 (or whatever) as a transfer from
Checking, let's say $800 from Checking/Alice (the tag) and $1200 from
Checking/Jan (the other tag). This will then (after hitting enter the
requisite number of times) show up as 2 transactions in checking. You
may have made out a $2000 check for this set of transactions, so watch
with the reconciliations. Also, I don't know what the lawyers or the IRS
will say. That's a question for misc.taxes.moderated

 

[Mr.Jan]

Hmm. If I understand, I would have 2 entries in checking rather than
the one they actually pull.

The more I think about it, the more I think setting up two loans for
50% each is the better deal. I do end up with 2 postings instead of
one to the checking account but it also allows either of us to pay off
principle and have it correctly calculate. I am starting to think the
trade off is worth it for a once-a-month "delete transaction" and
manually clicking "R" for the two entries.

No problem with the IRS. They are used to partnerships who allocate
expenses. As long as we don't go over 100% of the interest (and
taxes) and we have some kind of justification. That is the easy part.

 

[Sharx35]

My girlfriend and I have purchased a house together and are equally on
the mortgage. We make one payment to the mortgage holder from our
joint checking account (as well as utilities, etc) and track
everything in an excel spreadsheet.

I want to set up a loan account and use TAGs to show our respective
payments. I would set up one loan account and be able to allocate
interest, principle, and escrow to each party.

It looks like all I can do is set up two identical loans for 1/2 the
amount borrowed. The only real downside is that it gives me two
payment entries instead of one. Still, I would like to find a way to
only have one payment amount and let Quicken allocate it. Any
thoughts?

Thanks

Jan

Time to get married. Voila. No problem as marriage is SUPPOSED to be a total
union INCLUDING finances.

 

[Sharx35]

Hmm. If I understand, I would have 2 entries in checking rather than
the one they actually pull.

The more I think about it, the more I think setting up two loans for
50% each is the better deal. I do end up with 2 postings instead of
one to the checking account but it also allows either of us to pay off
principle and have it correctly calculate. I am starting to think the
trade off is worth it for a once-a-month "delete transaction" and
manually clicking "R" for the two entries.

No problem with the IRS. They are used to partnerships who allocate
expenses. As long as we don't go over 100% of the interest (and
taxes) and we have some kind of justification. That is the easy part.

IRS will soon consider you to be MARRIED as in common-law. Period.

 

[Mr.Jan]

Time to get married. Voila. No problem as marriage is SUPPOSED to be a total
union INCLUDING finances.

Seems a bit extreme to solve a Quicken problem. We have discussed
marriage but the tax increase for our combined incomes is prohibitive.

 

[Mr.Jan]

IRS will soon consider you to be MARRIED as in common-law. Period.

Why would the IRS consider us married? Separate names, separate
finances, separate careers. We share some expenses and went in
together to buy a house in the Washington DC area. Still one of the
most expensive in the country. Many people have to do that here. I
believe Virginia does recognize common law but the key metric for that
is to present yourself as married. We certainly do not. Besides, what
does that have to do with a Quicken setup question?

 

[R. C. White]

Hi, Jan.

I believe Sharx35 lives in Canada. Canadian rules may very well be
different from the USA. The IRS honors the law of the state where the
taxpayer resides - and there are more than 50 of those, including DC, Puerto
Rico, etc., in the definition of "state" for this purpose. The taxpayer's
marital status on the last day of a taxable year determines his/her marital
status for tax purposes for that entire year. With a marriage certificate,
the date is easily verified. I've never dealt with a common-law marriage
question, so I don't know how the effective date of that marriage is
determined.

Why would the IRS consider us married?
Separate names,

Doesn't matter to the IRS.

separate finances,

Doesn't matter.

separate careers.

Doesn't matter.

We share some expenses

Doesn't matter.

and went in together to buy a house

Still doesn't matter.

Married couples do these things regularly. So do many unmarried couples.

IF your resident jurisdiction considers you married on the last day of your
tax year, then you are eligible to ELECT to file a JOINT income tax return.
But you may still elect to file as MARRIED filing SEPARATELY - the most
expensive rates in the book. IF your local law considers you to be married,
you may NOT file as SINGLE for that year. (ALL CAPS are not intended as
SHOUTING, but only to emphasize the key words - including the IFs.)

Back to your original question, Jan: Why not use three bank accounts: His,
Hers and Theirs. Only Theirs would be a joint account. Transfers from His
and Hers accounts into Joint could be kept equal, while separate expenses
could be paid from the separate accounts.

As I've often mentioned here, I've been retired for nearly 20 years and tax
rules change often, so be sure to check with your own CPA to be sure that
this information is current.

RC
--
R. C. White, CPA
San Marcos, TX
(e-mail address removed)
Microsoft Windows MVP
Windows Live Mail Version 2011 (Build 15.4.3002.0810)) in Win7 Ultimate x64


"Mr.Jan" wrote in message

IRS will soon consider you to be MARRIED as in common-law. Period.

Why would the IRS consider us married? Separate names, separate
finances, separate careers. We share some expenses and went in
together to buy a house in the Washington DC area. Still one of the
most expensive in the country. Many people have to do that here. I
believe Virginia does recognize common law but the key metric for that
is to present yourself as married. We certainly do not. Besides, what
does that have to do with a Quicken setup question?

 

[Mr.Jan]

Married couples do these things regularly.  So do many unmarried couples.

IF your resident jurisdiction considers you married on the last day of your
tax year, then you are eligible to ELECT to file a JOINT income tax return.
But you may still elect to file as MARRIED filing SEPARATELY - the most
expensive rates in the book.  IF your local law considers you to be married,
you may NOT file as SINGLE for that year.  (ALL CAPS are not intended as
SHOUTING, but only to emphasize the key words - including the IFs.)

Back to your original question, Jan:  Why not use three bank accounts:  His,
Hers and Theirs.  Only Theirs would be a joint account.  Transfers from His
and Hers accounts into Joint could be kept equal, while separate expenses
could be paid from the separate accounts.

Thanks. We do use his, hers, and ours accounts. We agreed early on
that we do not want to co-mingle our finances. The question I posed is
to keep the "ours" account straight. There are many reasons one party
has a different balance in the "ours" account than the other and we
had never designed our expenses to be totally 50/50. We use the

As far as being considered COMMON LAW married, you are correct that
the IRS would use the Commonwealth of VA determination and we don't
meet that criteria to be defined as married in the eyes of the
commonwealth. We also each file as single. I think you understand,
we don't WANT to file jointly but I wanted to state that just to be
sure. I was responding to a previous post who declared that we would
be considered married by the IRS.

This whole thing started because I asked if there was a way of
dividing interest and principle for one loan between two parties
without editing each posting. I am trying to keep one payment posting
but it was more of an intellectual exercise. Certainly not a tax
matter.

 

[Sharx35]

Seems a bit extreme to solve a Quicken problem. We have discussed
marriage but the tax increase for our combined incomes is prohibitive.

Once the IRS discovers that you are living common-law, it'll be 6 of one,
half dozen of the other. Why do people try to lie about their TRUE marital
status? The tax authorities, in the end, find out and assess penalties
RETROACTIVELY, with compound daily interest. Time to fess up and do full
disclosure with them.

 

[Sharx35]

Hi, Jan.


I believe Sharx35 lives in Canada. Canadian rules may very well be
different from the USA. The IRS honors the law of the state where the
taxpayer resides - and there are more than 50 of those, including DC,
Puerto Rico, etc., in the definition of "state" for this purpose. The
taxpayer's marital status on the last day of a taxable year determines
his/her marital status for tax purposes for that entire year. With a
marriage certificate, the date is easily verified. I've never dealt with
a common-law marriage question, so I don't know how the effective date of
that marriage is determined.


Doesn't matter to the IRS.


Doesn't matter.


Doesn't matter.


Doesn't matter.


Still doesn't matter.

Married couples do these things regularly. So do many unmarried couples.

IF your resident jurisdiction considers you married on the last day of
your tax year, then you are eligible to ELECT to file a JOINT income tax
return. But you may still elect to file as MARRIED filing SEPARATELY - the
most expensive rates in the book. IF your local law considers you to be
married, you may NOT file as SINGLE for that year. (ALL CAPS are not
intended as SHOUTING, but only to emphasize the key words - including the
IFs.)

Back to your original question, Jan: Why not use three bank accounts:
His, Hers and Theirs. Only Theirs would be a joint account. Transfers
from His and Hers accounts into Joint could be kept equal, while separate
expenses could be paid from the separate accounts.

As I've often mentioned here, I've been retired for nearly 20 years and
tax rules change often, so be sure to check with your own CPA to be sure
that this information is current.

RC
--
R. C. White, CPA
San Marcos, TX
(e-mail address removed)
Microsoft Windows MVP
Windows Live Mail Version 2011 (Build 15.4.3002.0810)) in Win7 Ultimate
x64


"Mr.Jan" wrote in message



Why would the IRS consider us married? Separate names, separate
finances, separate careers. We share some expenses and went in
together to buy a house in the Washington DC area. Still one of the
most expensive in the country. Many people have to do that here. I
believe Virginia does recognize common law but the key metric for that
is to present yourself as married. We certainly do not. Besides, what
does that have to do with a Quicken setup question?

Listen up to RC, Mr. Jan. He has it right. Save yourself a LOT of financial
grief and be honest in your tax dealings.

 

[Mr.Jan]

I am amazed that my question on how to do something in Quicken has
taken this turn. I checked and common law marriage is not recognized
in the Commonwealth of Virginia (see below). Tax problem solved.

Mr. Jan
A "common law marriage" is one in which the parties may hold
themselves out as a husband and wife, and under certain circumstances,
be deemed married without a marriage license or ceremony.

Virginia does not allow the creation of a “common law” marriage, a
relationship in which a couple lives together but have not
participated in a lawful ceremony. Unlike some other states, in
Virginia a couple cannot acquire marital rights and responsibilities
by living together for a particular period of time. You do not need
legal action to end such a relationship, if it was created in
Virginia.

However, Virginia does recognize as valid, common law marriages
created in other states if the legal requirements of those states have
been met. As a result, legal action is needed to dissolve legal
“common law” marriages performed in other states and foreign countries
in compliance with their licensing and ceremonial regulations. The
courts are available for determining the rights of parties now living
in Virginia.

As long as a couple lives together as husband and wife, the question
of validity of their marriage is unlikely to arise. However, for
purposes of inheritance or the benefits of pension plans or social
security, a valid marriage is required.

 

[Han]

I am amazed that my question on how to do something in Quicken has
taken this turn. I checked and common law marriage is not recognized
in the Commonwealth of Virginia (see below). Tax problem solved.

Mr. Jan

<quote snipped>

Good for you!
(The discussion went this way because we didn't want you or anyone else to
paint themselves into a "married" corner)

 

[Sharx35]

I am amazed that my question on how to do something in Quicken has
taken this turn. I checked and common law marriage is not recognized
in the Commonwealth of Virginia (see below). Tax problem solved.

Mr. Jan

A "common law marriage" is one in which the parties may hold
themselves out as a husband and wife, and under certain circumstances,
be deemed married without a marriage license or ceremony.

Virginia does not allow the creation of a “common law” marriage, a
relationship in which a couple lives together but have not
participated in a lawful ceremony. Unlike some other states, in
Virginia a couple cannot acquire marital rights and responsibilities
by living together for a particular period of time. You do not need
legal action to end such a relationship, if it was created in
Virginia.

However, Virginia does recognize as valid, common law marriages
created in other states if the legal requirements of those states have
been met. As a result, legal action is needed to dissolve legal
“common law” marriages performed in other states and foreign countries
in compliance with their licensing and ceremonial regulations. The
courts are available for determining the rights of parties now living
in Virginia.

As long as a couple lives together as husband and wife, the question
of validity of their marriage is unlikely to arise. However, for
purposes of inheritance or the benefits of pension plans or social
security, a valid marriage is required.

 

[Bob Wang]

See what happens when individual freedoms are infringed upon by governments?

 

[Mr.Jan]

I lived in Canada for 18 months. I was not living with someone but the
situation did seem to come up occasionally. I admire the Canadian
culture and respect its laws but. yes, marriage in "the states" is
defined by the state or commonwealth. Hence, single sex marriages are
recognized by some and not others.

Now, a different question. If we owned the house jointly with a joint
mortgage but lived separately, would you feel the same way? For
financial purposes, we are business partners. We just happen to love
each other. I suspect in Canada, being married would be an advantage
tax-wise and for other areas. In the states, joint income of two
equal earners is a detriment.

Go figure.

I suspect I shall simply set up two loan accounts in Quicken with the
same due date. The advantage is that either of us can pay off early
without affecting the interest calculations of the other.

 

[Sharx35]

I lived in Canada for 18 months. I was not living with someone but the
situation did seem to come up occasionally. I admire the Canadian
culture and respect its laws but. yes, marriage in "the states" is
defined by the state or commonwealth. Hence, single sex marriages are
recognized by some and not others.

Now, a different question. If we owned the house jointly with a joint
mortgage but lived separately, would you feel the same way? For
financial purposes, we are business partners. We just happen to love
each other. I suspect in Canada, being married would be an advantage
tax-wise and for other areas. In the states, joint income of two
equal earners is a detriment.

Go figure.

I suspect I shall simply set up two loan accounts in Quicken with the
same due date. The advantage is that either of us can pay off early
without affecting the interest calculations of the other.

Mr. Jan, there are various factors at work here. I strongly advise you to
get advice from an accredited accountant.

 

[Mr.Jan]

Mr. Jan, there are various factors at work here. I strongly advise you to
get advice from an accredited accountant.

Thanks but this is really pretty simple stuff, tax wise. Fortunately,
this happens all the time. It was nice to find out that Virginia won't
declare us married unless we actually sign the papers though. I don't
see what is so complicated about two people purchasing a home
together.