Which account type to use for claimable expense I pay upfront for my employer?
"I used Quicken, so this may or may not be helpful. I have a Cash account that I call ""Temporary Assets and Liabilities"" where I track money that I am owed (or that I owe in some cases).  So if I pay for something that is really not my expense, it is transferred to this account (""transferred"" in Quicken terms).  The payment is then not treated as an expense and the reimbursement is not treated as income--the two transactions just balance out."
"How/when does my employer find out? Do they get a report from their   bank stating that ""check 1234 for $1212.12 paid to John Doe was never   deposited"" or does it manifest itself as an eventual accounting   discrepancy that somebody has to work to hunt down? The accounting department or the payroll company they use will report that the check was not deposited. The bank has no idea that a check was written, but the accounting deportment will know.  The bank reports on all the checks that were cashed. Accounting cares because the un-cashed check for $1212.12 is a liability. They have to keep enough money in the bank to pay all the liabilities. It shouldn't be hard for them to track down the discrepancy, they will know what checks are outstanding. Can my employer punish me for refusing the money in this way? Do they   have any means to force me to take what I am ""owed?"" They can't punish you. But at some time in the future they will will tell their bank not to honor the check. They will assume that it was lost or misplaced, and they will issue a new one to you.  When tax time comes, and I still have not accepted the money, would it   be appropriate to adjust my reported income down by the refused   amount? You can't decide not to report it. The company knows that in year X they gave you a check for the money. They are required to report it, since they also withheld money for Federal taxes, state taxes, payroll taxes, 401K, insurance. They also count your pay as a business expense.  If you try and adjust the numbers on the W-2  the IRS will note the discrepancy and want more information. Remember the IRS get a copy of every W-2.  The employer has to report it because some people who aren't organized may not have cashed a December check before the company has to generate the W-2 in late January. It would confuse everything if they could skip reporting income just because a check wasn't cashed by the time they had to generate the W-2." "You can deduct what you pay for your own and your family's health insurance regardless of whether it is subsidized by your employer or not, as well  as all other medical and dental expenses for your family, as an itemized deduction on Schedule A of Form 1040, but only to the extent that the  total exceeds 7.5% of your Adjusted Gross Income (AGI) (10% on tax returns for year 2013 onwards). As pointed out in KeithB's comment, you cannot deduct any health insurance premium (or other medical expense) that was paid for out of pre-tax dollars, nor indeed can you deduct any medical expense to the extent that  it was paid for by the insurance company directly to hospital or doctor (or reimbursed to you) for a covered expense; e.g. if the insurance company reimbursed you $72 for a claim for a doctor's visit for which you paid $100 to the doctor, only $28 goes on Schedule A to be added to the amount that you will be comparing to the 7.5% of AGI threshold, and the $72 is not income to you that needs to be reported on Form 1040. Depending on other items on Schedule A, your total itemized deductions might not exceed the standard deduction, in which case you will likely choose to use the standard deduction. In this case, you ""lose"" the deduction for medical expenses as well as all other expenses deductible on Schedule A. Summary of some of the discussions in the comments   Health care insurance premiums cannot be paid for   from HSA accounts (IRS Pub 969, page 8, column 2, near   the bottom) though there are some exceptions.  Nor   can health care insurance premiums be paid from an   FSA account (IRS Pub 969, page 17, column 1, near the top). If you have a business on the side and file a Schedule C as a self-employed person, you can buy medical insurance for that business's employees (and their families too, if you like) as an employment benefit, and pay for it out of the income of the Schedule C business, (thus saving on taxes). But be aware that if you have employees other than yourself in the side business, they would need to be covered by the same policy too.  You can even decide to pay all medical expenses of your employees and their families too (no 7.5% limitation there!) as an employment benefit but again, you cannot discriminate against other employees (if any) of the Schedule C business in this matter.  Of course, all this money that reduced your Schedule C income does not go on Schedule A at all. If your employer permits your family to be covered under its health insurance plan (for a cost, of course), check whether you are allowed to pay for the insurance with pre-tax dollars.  The private (non-Schedule C) insurance would, of course, be paid for with post-tax dollars.  I would doubt that  you would be able to save enough money on taxes to make up the difference between $1330/month and $600/month, but it might also be that the private insurance policy covers a lot less than your employer's policy does.  As a rule of thumb, group insurance through an employer can be expected to offer better coverage than privately purchased insurance. Whether the added coverage is worth the additional cost is a  different matter.  But while considering this matter, keep in mind that privately purchased insurance is not  always guaranteed to be renewable, and a company might decline to renew a policy if there were a large number of claims. A replacement policy might not cover pre-existing conditions for some time (six months? a year?) or maybe even permanently.  So, do consider these aspects as well.  Of course, an employer can also change health insurance plans or drop them entirely as an employment benefit (or you might quit and go work for a different company), but as long as the employer's health plan is in existence, you (and continuing members of your family) cannot be discriminated against and denied coverage under the employer's plan." "Can she claim deductions for her driving to and from work? Considering most people use their cars mostly to commute to/from work, there must be limits to what you can consider ""claimable"" and what you can't, otherwise everyone would claim back 80% of their mileage. No, she can't. But if she's driving from one work site to another, that's deductible whether or not either of the work sites is her home office. Can she claim deductions for her home office? There's a specific set of IRS tests you have to meet. If she meets them, she can. If you're self-employed, reasonably need an office, and have a place in your house dedicated to that purpose, you will likely meet all the tests. Can I claim deductions for my home office, even though I have an official work place that is not in my home? It's very hard to do so. The use of your home office has to benefit your employer, not just you. Can we claim deductions for our home internet service? If the business or home office uses them, they should be a deductible home office expense in some percentage. Usually for generic utilities that benefit the whole house, you deduct at the same percentage as the home office is of the entire house. But you can use other fractions if more appropriate. For example, if you have lots of computers in the home office, you can deduct more of the electricity if you can justify the ratio you use. Run through the rules at the IRS web page." "If you're willing to do a little more work and bookkeeping than just putting money into the 401(k) I would recommend the following. I note that you said you chose some funds based on performance since the expense ratios are all high. I would recommend against chasing performance because active funds will almost always falter; honor the old saw:  ""past performance is no guarantee of future returns"". Assuming the cash in your Ally account is an emergency fund, I would use it to pay off your credit card debt to avoid the interest payments. Use free cash flow in the coming months to bring the emergency fund balance back up to an acceptable level. If the Ally account is not an emergency fund, I would make it one! With no debt and an emergency fund for 3-12 months of living expenses (pick your risk tolerance), then you can concentrate on investing. Your 401(k) options are unfortunately pretty poor. With those choices I would invest this way: Once you fill up your choice of IRA, then you have the tougher decision of where to put any extra money you have to invest (if any). A brokerage account gives you the freedom of investment choices and the ability to easily pull out money in the case of a dire emergency. The 401(k) will give you tax benefits, but high fund expenses. The tax benefits are considerable, so if I were at a job where I plan on moving on in a few years, I'd fund the 401(k) up to the max with the knowledge that I'd roll the 401(k) into a rollover IRA in the (relatively) short term. If I saw myself staying at the employer for a long time (5+ years), I'd probably take the taxable account route since those high fund fees will add up over time. One you start building up a solid base, then I might look into having a small allocation in one of my accounts for ""play money"" to pick individual stocks, or start making sector bets." I'm not directly affiliated with the company (I work for one of the add-on partners) but I can wholeheartedly recommend Xero for both personal and business finances. Their basis is to make accounting simple and clean, without sacrificing any of the power behind having the figures there in the first place. I'm not familiar with Gnucash, but I can discuss double-entry bookkeeping in general. I think the typical solution to something like this is to create an Asset account for what this other person owes you. This represents the money that he owes you. It's an Accounts Receivable. Method 1: Do you have/need separate accounts for each company that you are paying for this person? Do you need to record where the money is going? If not, then all you need is: When you pay a bill, you credit (subtract from) Checking and debit (add to) Friend Account. When he pays you, you credit (subtract from) Friend Account and debit (add to) Checking. That is, when you pay a bill for your friend you are turning one asset, cash, into a different kind of asset, receivable. When he pays you, you are doing the reverse. There's no need to create a new account each time you pay a bill. Just keep a rolling balance on this My Friend account. It's like a credit card: you don't get a new card each time you make a purchase, you just add to the balance. When you make a payment, you subtract from the balance. Method 2: If you need to record where the money is going, then you'd have to create accounts for each of the companies that you pay bills to. These would be Expense accounts.  Then you'd need to create two accounts for your friend: An Asset account for the money he owes you, and an Income account for the stream of money coming in. So when you pay a bill, you'd credit Checking, debit My Friend Owes Me, credit the company expense account, and debit the Money from My Friend income account.  When he repays you, you'd credit My Friend Owes Me and debit Checking. You don't change the income or expense accounts. Method 3: You could enter bills when they're received as a liability and then eliminate the liability when you pay them. This is probably more work than you want to go to. or just input it in my accounting software along with receipts, and   then when I'm doing taxes this would go under the investment or loses   (is it somewhere along that line)? Yes, this. Generally, for the long term you should have a separate bank account and charge card for your business. I started my business (LLC) by filing online, and paying a fee for a   registration, and that makes it a business cost right? Startup cost. There are special rules about this. Talk to your tax adviser. For the amounts in question you could probably expense it, but verify. "The FSA, in contrast to the HSA, is not an ""account"" that you put money in.  FSA stands for ""Flexible Spending Arrangement,"" not ""Account.""  Technically, it is a defined-benefit plan.  Here is the difference: With an account such as an HSA, you put money into the account, and you get that same money out.  You can't take money out unless you first put money in. The FSA doesn't work that way.  Instead, you pick an annual amount that your FSA will cover, and work out a monthly fee to pay for it.  For example, you might decide on a $1800 FSA, which will cost you $150 per month.  However, the $150 you pay each month does not go into an account for you; instead, it goes to your employer, who is managing the plan. Let's say that in January, at the beginning of the plan year, you have a large medical expense of $1000.  You've only had $150 taken out of your paycheck so far this year, but you are covered for $1800, so you get reimbursed the full $1000.  This is referred to as ""uniform coverage"", meaning that you get the full $1800 of coverage on day 1 of the year. Now let's say that you leave your job in March.  You've only paid $450, and you've received $1000 in benefit.  You do not owe your employer the rest of the money; your employer eats this cost.  This is the trade-off that the FSA offers over other types of accounts: depending on an employee's circumstances, an employer might make money (use-it-or-lose-it) or might lose money (uniform coverage) on an individual employee. The idea behind the use-it-or-lose-it provision of the FSA is to help the employer pay for the uniform coverage provision. The details behind the FSA (and other types of health plans) are outlined in IRS Publication 969. I'm sure that a secondary reason behind the use-it-or-lose-it provision is that it encourages an employee to keep his FSA plan small, so he can use it all up and not have to lose too much of it at the end of the year.  And a smaller FSA contribution means more tax money for the government. To address your point that it shouldn't be this way: I'm personally not a fan of the FSA because of the use-it-or-lose-it provision.  But participation is voluntary, for both employers and employees.  You proposed an alternative set of rules for the FSA, but you are basically describing an HSA, in which you cannot spend more than you have, and you get to keep whatever is left over.  The recent rules changes that allow plans to feature a grace period or a small carryover balance were an attempt to make the FSA a little more attractive/useful, but if you want the ability to keep your money and not have to spend it at all, use an HSA instead."