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Client has me setup as a temp employee, taking out taxes. How do I record it?

Hi all.

One of my clients has me setup with a w9, and is withholding taxes. I would like to track this within QuickBooks. How would I do that?

 

Is the approach something like:

  1. Create an invoice for that client.
  2. Create something like Tax-Withheld Earnings from Contracted Project, or would I use something else? I wouldn’t want to pay tax again on this item, since this is already withheld from the client.
    Example of what I was thinking:
    image001.png
  3. In the invoice, have the one line item (step 2) and put in the NET amount on the check I received.
  4. Deposit the check.
  5. When the check arrives in QB, “pay” out the above invoice.

Is that the best approach?

 

What would I need to do to ensure this isn’t calculated in estimated taxes?

 

Someone suggested the following, but since I'm no expert in QBO, I don't really follow:

You should record the total invoice value as income, then create a line item on the invoice that will offset the cash received by hitting "Owner Withdrawals for Taxes" or another equity account you could set up "Tax Withheld by Client" (or something similar). The amount withheld only offsets the amount of tax you are required to pay in as estimated tax payments and would be credited to you on your return. 

 

Any 

Thanks all.

 

Solved
Best answer 02-15-2019

Accepted Solutions
Anonymous
Not applicable

Re: Client has me setup as a temp employee, taking out taxes. How do I record it?

Good day, @TCConway,

 

I appreciate your time getting in touch with us and providing us with in-depth details about your issue. Let's get this squared away.

 

If you'd like to track this in QuickBooks using an invoice, you can follow the suggestion to create an invoice by adding a line item to record the check you receive and the tax paid by the client. Here's how:

  1. Click the Plus (+) icon.
  2. Choose Invoice.
  3. Enter the name on the client in the Customer field.
  4. Fill out all the necessary information on the invoice.
  5. In the Product/Service column, click a new line item.
  6. From the drop-down, click on Add new to create an item for the check you receive.
  7. Choose Service.
  8. In the Product/Service information, enter the correct Income account you want to deposit the payment.
  9. Click Save and close.
  10. Enter the check amount before taxes in the Amount column.
  11. Click another line item and click Add new.
  12. Add another Service item.
  13. Enter the account where you'd like to track the tax amount in the Income account field.
  14. Click Save and close.
  15. Enter a negative amount for the tax paid by the client.
  16. Click Save and close.

That should give you the total amount less taxes, @TCConway. Once you receive the check payment, you can then use the Receive Payment option to record it in QuickBooks.

 

Additionally, since all businesses are unique, I suggest reaching out to your accountant for additional guidance. They can ensure the correct account is used for the items on the invoice transaction.

 

Please let me know if there's anything you need help with. I'm always around to help you get back on track. Have a good day!

View solution in original post

1 Comment
Anonymous
Not applicable

Re: Client has me setup as a temp employee, taking out taxes. How do I record it?

Good day, @TCConway,

 

I appreciate your time getting in touch with us and providing us with in-depth details about your issue. Let's get this squared away.

 

If you'd like to track this in QuickBooks using an invoice, you can follow the suggestion to create an invoice by adding a line item to record the check you receive and the tax paid by the client. Here's how:

  1. Click the Plus (+) icon.
  2. Choose Invoice.
  3. Enter the name on the client in the Customer field.
  4. Fill out all the necessary information on the invoice.
  5. In the Product/Service column, click a new line item.
  6. From the drop-down, click on Add new to create an item for the check you receive.
  7. Choose Service.
  8. In the Product/Service information, enter the correct Income account you want to deposit the payment.
  9. Click Save and close.
  10. Enter the check amount before taxes in the Amount column.
  11. Click another line item and click Add new.
  12. Add another Service item.
  13. Enter the account where you'd like to track the tax amount in the Income account field.
  14. Click Save and close.
  15. Enter a negative amount for the tax paid by the client.
  16. Click Save and close.

That should give you the total amount less taxes, @TCConway. Once you receive the check payment, you can then use the Receive Payment option to record it in QuickBooks.

 

Additionally, since all businesses are unique, I suggest reaching out to your accountant for additional guidance. They can ensure the correct account is used for the items on the invoice transaction.

 

Please let me know if there's anything you need help with. I'm always around to help you get back on track. Have a good day!

View solution in original post

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