Customer withheld tax when paying an invoice

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:

1. Click the Gear icon at the top.
2. Choose Chart of Accounts.
3. Tap the New button.
4. From Account Type drop-down, pick Other Expense.
5. From Detail Type drop-down, select Other Miscellaneous Expense.
6. Name the account Withholding Tax Expense.
7. Hit Save.

To set up a withholding tax expense item:

1. Click the Gear icon at the top.
2. Choose Products and Services.
3. Tap the New button.
4. Select Service.
5. Name the item Withholding Tax.
6. From Income account drop-down, select the withholding tax expense account that you’ve just created.
7. Hit Save and close.

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.

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