Payment recieved for Invoice with tax taken off

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

Reply to
Mike
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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.

Reply to
Tee

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?

Reply to
L

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 deposit will always show Customer = $100 and fee/expense deducted of leaving a deposit of $97.00

I think it would be much messier.

Reply to
Tee

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.

Reply to
mickamg

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.

Reply to
Tee

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.

Reply to
Golden California Girls

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

Reply to
Mike

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?

Reply to
HeyBub

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?
Reply to
Golden California Girls

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.

Reply to
HeyBub

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).

Reply to
S.M.Serba

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.

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.

Reply to
Golden California Girls

You could for personal debts - school loans, child support.

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.

Reply to
HeyBub

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