From 787e04f4fe2eea30c546fcb254ac8dbece5208cf Mon Sep 17 00:00:00 2001
From: eureka928 <meobius123@gmail.com>
Date: Thu, 29 Jan 2026 13:49:49 +0100
Subject: [PATCH] Fix budget category totals to net refunds against expenses

Budget spending calculations now subtract refunds (negative transactions
classified as income) from expense totals in the same category. Previously,
refunds were excluded entirely, causing budgets to show gross spending
instead of net spending.

Fixes #314
---
 app/models/budget.rb       | 14 ++++++-
 test/models/budget_test.rb | 82 ++++++++++++++++++++++++++++++++++++++
 2 files changed, 94 insertions(+), 2 deletions(-)

diff --git a/app/models/budget.rb b/app/models/budget.rb
index acdd128d1..3d71c859c 100644
--- a/app/models/budget.rb
+++ b/app/models/budget.rb
@@ -155,11 +155,13 @@ class Budget < ApplicationRecord
   end
 
   def actual_spending
-    expense_totals.total
+    [ expense_totals.total - refunds_in_expense_categories, 0 ].max
   end
 
   def budget_category_actual_spending(budget_category)
-    expense_totals.category_totals.find { |ct| ct.category.id == budget_category.category.id }&.total || 0
+    expense = expense_totals.category_totals.find { |ct| ct.category.id == budget_category.category.id }&.total || 0
+    refund = income_totals.category_totals.find { |ct| ct.category.id == budget_category.category.id }&.total || 0
+    [ expense - refund, 0 ].max
   end
 
   def category_median_monthly_expense(category)
@@ -235,6 +237,14 @@ class Budget < ApplicationRecord
   end
 
   private
+    def refunds_in_expense_categories
+      expense_category_ids = budget_categories.map(&:category_id).to_set
+      income_totals.category_totals
+        .reject { |ct| ct.category.subcategory? }
+        .select { |ct| expense_category_ids.include?(ct.category.id) }
+        .sum(&:total)
+    end
+
     def income_statement
       @income_statement ||= family.income_statement
     end
diff --git a/test/models/budget_test.rb b/test/models/budget_test.rb
index cff5cd6cc..2cadc6a40 100644
--- a/test/models/budget_test.rb
+++ b/test/models/budget_test.rb
@@ -75,6 +75,88 @@ class BudgetTest < ActiveSupport::TestCase
     assert_nil budget.previous_budget_param
   end
 
+  test "actual_spending nets refunds against expenses in same category" do
+    family = families(:dylan_family)
+    budget = Budget.find_or_bootstrap(family, start_date: Date.current.beginning_of_month)
+
+    healthcare = Category.create!(
+      name: "Healthcare #{Time.now.to_f}",
+      family: family,
+      color: "#e74c3c",
+      classification: "expense"
+    )
+
+    budget.sync_budget_categories
+    budget_category = budget.budget_categories.find_by(category: healthcare)
+    budget_category.update!(budgeted_spending: 200)
+
+    account = accounts(:depository)
+
+    # Create a $500 expense
+    Entry.create!(
+      account: account,
+      entryable: Transaction.create!(category: healthcare),
+      date: Date.current,
+      name: "Doctor visit",
+      amount: 500,
+      currency: "USD"
+    )
+
+    # Create a $200 refund (negative amount = income classification in the SQL)
+    Entry.create!(
+      account: account,
+      entryable: Transaction.create!(category: healthcare),
+      date: Date.current,
+      name: "Insurance reimbursement",
+      amount: -200,
+      currency: "USD"
+    )
+
+    # Clear memoized values
+    budget = Budget.find(budget.id)
+    budget.sync_budget_categories
+
+    # Budget category should show net spending: $500 - $200 = $300
+    assert_equal 300, budget.budget_category_actual_spending(
+      budget.budget_categories.find_by(category: healthcare)
+    )
+  end
+
+  test "budget_category_actual_spending does not go below zero" do
+    family = families(:dylan_family)
+    budget = Budget.find_or_bootstrap(family, start_date: Date.current.beginning_of_month)
+
+    category = Category.create!(
+      name: "Returns Only #{Time.now.to_f}",
+      family: family,
+      color: "#3498db",
+      classification: "expense"
+    )
+
+    budget.sync_budget_categories
+    budget_category = budget.budget_categories.find_by(category: category)
+    budget_category.update!(budgeted_spending: 100)
+
+    account = accounts(:depository)
+
+    # Only a refund, no expense
+    Entry.create!(
+      account: account,
+      entryable: Transaction.create!(category: category),
+      date: Date.current,
+      name: "Full refund",
+      amount: -50,
+      currency: "USD"
+    )
+
+    budget = Budget.find(budget.id)
+    budget.sync_budget_categories
+
+    assert_equal 0, budget.budget_category_actual_spending(
+      budget.budget_categories.find_by(category: category)
+    )
+  end
+
   test "previous_budget_param returns param when date is valid" do
     budget = Budget.create!(
       family: @family,