Tax withholding


A

Arthur Albano

Tax withholding, also known as taxation at source and withholding at
source (there are some differences) are, somehow, charged on the source
or payer of income and he is authorized to recover the tax by deducting
and retaining it when paying the income to its owner. This is very
common practice in England and other countries, such as Brazil.

For example, when an invoice of $1000 is paid by a company (customer),
the government authorize the company to withhold 10% of the invoice,
thus paying to the vendor (who issued the invoice) just $900. The tax
is transferred (by the customer) to the tax agency ($100). The vendor
can now contact the tax agency
to receive full/partial refund on the withheld tax.

How can QuickBooks handle this?

Thanks for your help,
Arthur.
 
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A

Allan Martin

Arthur Albano said:
Tax withholding, also known as taxation at source and withholding at
source (there are some differences) are, somehow, charged on the source
or payer of income and he is authorized to recover the tax by deducting
and retaining it when paying the income to its owner. This is very
common practice in England and other countries, such as Brazil.

For example, when an invoice of $1000 is paid by a company (customer),
the government authorize the company to withhold 10% of the invoice,
thus paying to the vendor (who issued the invoice) just $900. The tax
is transferred (by the customer) to the tax agency ($100). The vendor
can now contact the tax agency
to receive full/partial refund on the withheld tax.

How can QuickBooks handle this?
\

If this is a common situation in certain countries then one would be led to
believe that the version of Quickbooks sold in those countries would have
specific functions built in to address this.
 
?

!-!

If the local QB version does not have specific tax withholding
features -
Create an Other Current Liability account called Taxes Withheld. When
recording the Vendor's bill add a line on the Expenses tab for the
Taxes Withheld account and enter the tax as a negative amount.
If this doesn't answer your question, consult your accountant for
advice.
 
A

Arthur

There are also other solutions:
.. Create/Change discounts that go to Other (Current) Liability Account
in the invoice (as we already know which taxes are to be withheld);
.. Create a an Undeposited Funds Account and the transfer the correct
amount to Cash and to Tax accounts.
Anyone else?
Best regards and many thanks,
Arthur.
 
A

Arthur

Indeed. But think what would happen if you were in the U.S. and an
overseas company charged you taxes? There should be a Tax Withholding
(as discount) button in the receive payments form to enter multiple Tax
withholding (as well multiple contract discounts).
So, wouldn't that be a nice and simple idea?
Thanks,
Arthur.
 
?

!-!

You cannot "Create a an Undeposited Funds Account". This is a
"special" account automatically created by QuickBooks, and there can
be only one of them.
 
S

Seth Grimes

Arthur said:
Indeed. But think what would happen if you were in the U.S. and an
overseas company charged you taxes? There should be a Tax Withholding
(as discount) button in the receive payments form to enter multiple Tax
withholding (as well multiple contract discounts).
So, wouldn't that be a nice and simple idea?
Thanks,
Arthur.
I'm in this situation and need a good way to handle it.
 
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