Tax only a percentage of certain items?

Without much thought on my part, why not adjust the tax rate to 80% of the normal rate?

Current tax rate is 8.25.

Collecting full tax (8.25%) on $80 (as in example above) is $86.60. (This is what we are trying to do.)

Collecting 80% of the tax rate (which would make it 6.1875%) on full amount (100.00) comes out to $106.19.

Big difference! :)

No, what I think you are really trying to do is come up with TAX amount of $6.60 on your sales of $100 (since that is the only part payable to the state - the $86.60 amount is meaningless). The amount payable by customer is $106.60, isn't it?? Use 6.6% rate on the full taxable amount, and that will calculate the proper amount of sales tax payable. (And that is 80% of 8.25% anyway. The 6.1875% you quoted is only 75%...)

vcardx

: > Without much thought on my part, why not adjust the tax rate to 80% of the : > normal rate? : >

: Current tax rate is 8.25. : : Collecting full tax (8.25%) on $80 (as in example above) is $86.60. : (This is what we are trying to do.) : : Collecting 80% of the tax rate (which would make it 6.1875%) on full : amount (100.00) comes out to $106.19. : : Big difference! :) : : >

: >

Contact your state comptroller. You cannot be a pioneer.

The state wants it to be EASY for you to collect the tax, so there's got to be an acceptable way. Don't forget, the sales tax is a tax on YOU, not the customer - you're just allowed to collect a surcharge. Here's an example: Suppose you sold something for a nickle, but you sell a LOT of them. The state doesn't allow you to collect a tax for a five-cent purchase, but the state certainly wants its 6.25% of your gross sales.

Sales tax collected and sales tax owed virtually never come out the same.

If you spent more time listening to the math teacher in 4th grade you would not be posting the above. This is why our jobs are being lost to workers in India and China.

You're right, but thanks for the nice message anyway. I was confused. I actually initially thought that we were supposed to only collect 80% of the tax and then I was told we are supposed to collect tax on 80% of the bill. So, like you, I wasn't thinking clearly when I posted that.

In any case, there are some things I need to collect full tax on, so setting the tax rate to the incorrect amount (as you initially suggested) wouldn't work, right?

You're right, but what if I need to collect full sales tax on other items that are not classified as 'information services' - then I'm kind of screwed, right?

think you are really trying to do is come up with TAX amount of

I was just wondering if there was a legitimate way to do this in QB without using an incorrect tax rate.

Sorry about the insult perhaps I am off base. Back in the day I minored in math in college so perhaps the solution that I gave is really not that obvious to others.

If for certain services, only 80% of the fee charged is subject to sales tax then using a rate of only 80% of the normal tax rate will result in the correct tax collected. Is this concept that hard to grasp?

By the way what state are we taking about?

Wrong, just set up a second tax, payable to the same state, only with a different rate.

It's not hard to grasp. But there are some items I have to charge tax on the FULL amount, and some that I need to charge on 80%. We sell different types of services, but only those that fall under "Information Services" are subject to the 80% law. This is Texas.

Can I set 2 different tax rates in QB? Is that what you are trying to suggest?

Okay, thanks. Unforunately, I work for a very small company. 8 employees. I don't do the accounting and have never worked with QB. The person that does the accounting didn't know who to ask or where to ask (she tried searching their site but didn't have much luck because I think she didn't know what solution she was looking for) and I offered to post this message on here. I'm sorry you think I'm such an idiot, but I'm just not familiar with this software.

Now that I know that we can set 2 different tax rates, that may solve our problem.

The only issue I see is that part of the taxes go to one entity, and part to another - do you think that using the incorrect tax rate will screw up our tax reporting?

Need greater detail concerning payment to two entities to answer.

You can set up as many tax rates that you need in QB. Make the tax rate name obvious to the accounting person. Better yet create a "cheat sheet" so that she knows with tax rate to use when she does her billing.

We run into something similar in Az.

We are required to collect sales tax on 65% of the total for all contracting jobs rather than 100% of materials and 0% of labor as is the case with service and repair work.

It seemed unweildy and we had a "tax add in" item in our Quickbooks for years where we would plug in:

(Contracting Total) X .65 X .087 = Sales Tax collected manually on each contracting job.

Then one day I said, why not just calculate .65 X .087 and make that the tax rate for contracting. Duh! .0565555 or 5.7%

We did this for each tax jurisdiction where we perform contracting, and now we just have a contracting tax item for each location that automatically calculates the sales tax for us.

When we set up the customer we setup a job for each location and one for retail for our location for them. Sales taxes then get calculated properly and automatically. Whenever the sales tax rates changes in one of the tax jurisdictions we just recalculate the contracting rate for that jurisdiciton and its done automatically again.

Woo! Hoo!

You can set a hundred different tax rates.

Indeed one can, however it takes a little more knowledge of QB when the tax rate or taxing jurisdiction varies amoung several items on the invoice.

California has nearly that many. I believe you can have about 14500 tax rates.