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We invoiced a customer in California for software services. When they sent a remittance, they withheld a portion of the amount for CA tax. The invoice was for $240K and they paid us $238,320. Now sure how to handle this. We will file a tax return in CA so the difference will be factored there. But how do I apply the payment and indicate the invoice is paid? Suggestions?
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Hi there, JoyceGTX.
I'd be happy to share information with you on how to handle customers withholding tax when paying an invoice.
You'll need to create a withholding tax expense account and tax expense item to track the charges. Let me show you how:
To set up a withholding tax expense account:
To set up a withholding tax expense item:
Then, you can use the credit note to charge off the withholding tax as an expense. Doing so will mark the invoice as paid in full. See this article for the detailed process (proceed to Step 3-4): How do I record tax withheld by my customer?.
You can also see this resource which you may find helpful: Record invoice payments in QuickBooks Online.
If there's anything else I can assist you with, in managing your QuickBooks account, feel free to leave a comment below. I'm always here to lend a hand.
**Say "Thanks" by clicking the thumb icon in a post.
**Mark the post that answers your question by clicking on "Accept as solution".
Hi there, JoyceGTX.
I'd be happy to share information with you on how to handle customers withholding tax when paying an invoice.
You'll need to create a withholding tax expense account and tax expense item to track the charges. Let me show you how:
To set up a withholding tax expense account:
To set up a withholding tax expense item:
Then, you can use the credit note to charge off the withholding tax as an expense. Doing so will mark the invoice as paid in full. See this article for the detailed process (proceed to Step 3-4): How do I record tax withheld by my customer?.
You can also see this resource which you may find helpful: Record invoice payments in QuickBooks Online.
If there's anything else I can assist you with, in managing your QuickBooks account, feel free to leave a comment below. I'm always here to lend a hand.
**Say "Thanks" by clicking the thumb icon in a post.
**Mark the post that answers your question by clicking on "Accept as solution".
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