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Tax withholding

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.

Reply to
Arthur Albano
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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.

Reply to
Allan Martin

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.

"Allan Mart> If this is a common situation in certain countries then one would be

Reply to
!-!

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.

Reply to
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.

Reply to
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.

Reply to
!-!

I'm in this situation and need a good way to handle it.

Reply to
Seth Grimes

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