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Level 2

How to record customer payment with income tax deduction?

Hi,

I want to record a payment received from customer. Invoice was for 10500 and customer have paid 10000 and 500 deducted as Income Tax. 

I am able to record payment against invoice of 10500 fully.

But I need to record payment of 10000 into bank account and 500 deduction into Income tax account.

Please help me do that.

Thank and regards,

Mateen

 

Solved
Best answer 11-29-2018

Best Answers
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Community Champion

How to record customer payment with income tax deduction?

If this is backup withholding or you failed to provide them with a W-9 they did not keep nearly enough, should have been 20% but in any event you now have a current asset of $500 to apply when you pay your taxes.

 

You did not say how your company is set up but for simplicity let me assume you are any of the several pass-through entities, meaning your company does not pay income tax but you as an individual do. So, this is not a company asset, but a personal asset and what you do is treat the $500 as Owner Draw. Receive $10,500 payment in full as Undeposited Funds. Create Deposit, payment of 10,500 less 500 to draw. You have to do it as a negative line item since the Cash Back feature can only place funds into bank type accounts.

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Highlighted
Community Champion

How to record customer payment with income tax deduction?

If this is backup withholding or you failed to provide them with a W-9 they did not keep nearly enough, should have been 20% but in any event you now have a current asset of $500 to apply when you pay your taxes.

 

You did not say how your company is set up but for simplicity let me assume you are any of the several pass-through entities, meaning your company does not pay income tax but you as an individual do. So, this is not a company asset, but a personal asset and what you do is treat the $500 as Owner Draw. Receive $10,500 payment in full as Undeposited Funds. Create Deposit, payment of 10,500 less 500 to draw. You have to do it as a negative line item since the Cash Back feature can only place funds into bank type accounts.

View solution in original post

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Level 2

How to record customer payment with income tax deduction?

Thanks for your answer. It really helped me record.

Further I would like to ask that, Can we automate this thing, like we usually have 10% tax deduction payment cheque receipts. It would be great that if QB calculates and indicates the 10 % amount separated from payment receipt.

Regards

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QuickBooks Team

How to record customer payment with income tax deduction?

Hi, Mateen.

 

Currently, we don't have the option to automatically separate the 10% tax deduction from the payment receipt. For now, you can follow @john-pero's advice to manually create this transaction as a deposit. 

 

I also suggest sending feedback to our product engineers. This is the best way to let them know the features our customers want the most. You can do that by going to the Help menu, clicking Send Feedback Online, then choosing Product Suggestion

 

We'd love to hear your thoughts and suggestions. Don't hesitate to post in the Community again if you have other concerns. 

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