Payment recieved for Invoice with tax taken off


M

Mike

I recently issued an invoice to a major Government organization and it came
back paid with income tax already deducted. Clearly, this means that there's
still an outstanding balance on the customer's account and I also need to
record the fact that I've had to pay some tax (horror!) I have trawled the
QB help files Iincluding the web FAQs) but to no avail. Any help or advice
would be gratefully received. I'm using QB Regular 2005.

Regards

Mike
 
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T

Tee

Mike said:
I recently issued an invoice to a major Government organization and it came
back paid with income tax already deducted. Clearly, this means that
there's still an outstanding balance on the customer's account and I also
need to record the fact that I've had to pay some tax (horror!) I have
trawled the QB help files Iincluding the web FAQs) but to no avail. Any
help or advice would be gratefully received. I'm using QB Regular 2005.
There's no balance for the customer.

When you go to Customers > Receive Payments enter the entire payment as
received but choose the Undeposited Funds option at the bottom.

In the Banking > Make Deposits window select the payment above then drop
down a line, enter your account for prepaid taxes and enter the amount
deducted as a negative.

This will give you the correct total for deposit and place the deduction in
its proper place while giving full credit to the customer for payment.
 
L

L

Tee said:
There's no balance for the customer.

When you go to Customers > Receive Payments enter the entire payment as
received but choose the Undeposited Funds option at the bottom.

In the Banking > Make Deposits window select the payment above then drop
down a line, enter your account for prepaid taxes and enter the amount
deducted as a negative.

This will give you the correct total for deposit and place the deduction
in its proper place while giving full credit to the customer for payment.
Sounds wrong somehow...
At the Customer > Recieve payments window---
If the OP enters the amount received, s/he is entering a SMALLER amount than
the invoice.
If the OP enters the amount of the invoice, the check information will be
incorrect. If they ever need to track the actual payment, the information
will be lost.

Wouldn't it be best to handle this through the general journal?
 
T

Tee

L said:
Sounds wrong somehow...
At the Customer > Recieve payments window---
If the OP enters the amount received, s/he is entering a SMALLER amount
than the invoice.
If the OP enters the amount of the invoice, the check information will be
incorrect. If they ever need to track the actual payment, the information
will be lost.
Bad wording but I meant that the OP should receive payment in full, not the
amount of the check. Its the same idea behind recording cc payments or
those from paypal where fees come out per transaction. The fact that you
(general) only receive $97 of a customer's $100 doesn't negate the fact that
the customer *did* pay the full $100.

I'm not certain I see where a tracking problem lies. Double-clicking the
Wouldn't it be best to handle this through the general journal?
I think it would be much messier.
 
M

mickamg

I may be completely wrong about this, or maybe it's just because I'm
small. We do alot with non-profits, but bill with tax until we get the
exemption certificate. If they pay everything but the tax, and provide
an exempt form, I simply go back to the invoice, mark their account as
"non", and the invoice changes to an amount without tax applied. Then
I go into Receive payments and the amount due is the same as the check.
 
T

Tee

mickamg said:
I may be completely wrong about this, or maybe it's just because I'm
small. We do alot with non-profits, but bill with tax until we get the
exemption certificate. If they pay everything but the tax, and provide
an exempt form, I simply go back to the invoice, mark their account as
"non", and the invoice changes to an amount without tax applied. Then
I go into Receive payments and the amount due is the same as the check.
The way you do it is fine. The situation being discussed in this thread has
to do with a government agency deducting income tax (not sales tax) from the
payment amount.
 
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G

Golden California Girls

Mike said:
I recently issued an invoice to a major Government organization and it came
back paid with income tax already deducted. Clearly, this means that there's
still an outstanding balance on the customer's account and I also need to
record the fact that I've had to pay some tax (horror!) I have trawled the
QB help files Iincluding the web FAQs) but to no avail. Any help or advice
would be gratefully received. I'm using QB Regular 2005.

Regards

Mike
Was it income tax or backup witholding? Only real difference is where you put
the payment, prior year or current year tax obligation.

Tee's suggestion will work, but the other way to do it is to discount the
invoice to the tax prepaid account.
 
M

Mike

Thanks one and all for your helpful comments. I'll try what's been suggested
and let you know how I get on,

Regards

Mike
 
H

HeyBub

Mike said:
I recently issued an invoice to a major Government organization and
it came back paid with income tax already deducted. Clearly, this
means that there's still an outstanding balance on the customer's
account and I also need to record the fact that I've had to pay some
tax (horror!) I have trawled the QB help files Iincluding the web
FAQs) but to no avail. Any help or advice would be gratefully
received. I'm using QB Regular 2005.
Income tax? INCOME TAX?

Are you quite certain?

Sounds more like you charged SALES tax to a tax-exempt entity and they
deducted same when paying. If so, edit the invoice before accepting the
payment.

If you are, in fact, talking about INCOME tax, what country, please?
 
G

Golden California Girls

HeyBub said:
Income tax? INCOME TAX?

Are you quite certain?

Sounds more like you charged SALES tax to a tax-exempt entity and they
deducted same when paying. If so, edit the invoice before accepting the
payment.

If you are, in fact, talking about INCOME tax, what country, please?
Apparantly you have never sold directly to the United States Government
before. It's in the boilerplate on their PO's. If you owe, it comes off,
as does back child support, student loans, etc. The way around this[1] is
to get them to give you a credit card to charge as that doesn't go through
the IRS computer check before the draft is printed.



[1] Is Allan going to flame me for this?
 
H

HeyBub

Golden said:
Income tax? INCOME TAX?

Are you quite certain?

Sounds more like you charged SALES tax to a tax-exempt entity and
they deducted same when paying. If so, edit the invoice before
accepting the payment.

If you are, in fact, talking about INCOME tax, what country, please?
Apparantly you have never sold directly to the United States
Government before. It's in the boilerplate on their PO's. If you
owe, it comes off, as does back child support, student loans, etc.
The way around this[1] is to get them to give you a credit card to
charge as that doesn't go through the IRS computer check before the
draft is printed.
No, I've never sold to the US government. But how in the hell can they
deduct for INCOME tax? Maybe you're a corporation in the 30%+ arena. Maybe
you're not making a profit and your ultimate income tax for the year will be
zero. Maybe, due to circumstances beyond your control, you're taking a loss
on the sale.

Oh, re-reading, you say: "... if you owe, it comes off..." They are
deducting for a prior obligation, right? Not the sale at issue?

Incorporate (for $100 in Deleware) and stay below the radar.
 
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S

S.M.Serba

Why not contact this organization and ASK what they took off and why. If
they deducted your SALES tax, should they not have some kind of exemption
number or document they need to send you? (Yes in Canada even tax exempt
government agencies are required to provide exemption certificates, and
NOBODY is exempt from paying GST despite what they may say).
 
G

Golden California Girls

HeyBub said:
No, I've never sold to the US government. But how in the hell can they
deduct for INCOME tax? Maybe you're a corporation in the 30%+ arena. Maybe
you're not making a profit and your ultimate income tax for the year will be
zero. Maybe, due to circumstances beyond your control, you're taking a loss
on the sale.

Oh, re-reading, you say: "... if you owe, it comes off..." They are
deducting for a prior obligation, right? Not the sale at issue?
Bingo.
Or you didn't report things you should have in prior years and you are now
subject to backup withholding, read about that little gem on the W-9 form.
Backup withholding is a trust issue, they catch you cheating and they make damn
sure they get their due first! You get it back if they over withold but not
until you file your taxes at the end of the year.
Incorporate (for $100 in Deleware) and stay below the radar.
Can't stay below the Federal Radar.

Oh just love that Delaware option, cause the powers that be where I work -- a
LLC -- took it and found out that California now taxes them on Gross Revenue
rather than Net Profit as they would if they were a California Corp. They
listened to the Lawyer explain how great Delaware was from a legal standpoint
and forgot to ask the CPA what happens from a tax standpoint.
 
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H

HeyBub

Golden said:
Bingo.
Or you didn't report things you should have in prior years and you
are now subject to backup withholding, read about that little gem on
the W-9 form. Backup withholding is a trust issue, they catch you
cheating and they make damn sure they get their due first! You get
it back if they over withold but not until you file your taxes at the
end of the year.


Can't stay below the Federal Radar.
You could for personal debts - school loans, child support.
Oh just love that Delaware option, cause the powers that be where I
work -- a LLC -- took it and found out that California now taxes them
on Gross Revenue rather than Net Profit as they would if they were a
California Corp. They listened to the Lawyer explain how great
Delaware was from a legal standpoint and forgot to ask the CPA what
happens from a tax standpoint.
That's nuts. Get a tax lawyer. I can't imagine any entity taxing based on
REVENUE. If that were the case, California would be awash in surplus from
just the movie industry.
 

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