Can we implement a tax for some type of invoice that the agency ask us to make a retention of 10.75% and pay that within monthly taxes. How can we implement that?

Yes, It's possible, usercristian.

I have some steps to help you include a retention on an invoice. To start, let's create a retainage account in the Chart of Accounts.

Here's how:

1. Go to Accounting > Chart of Accounts.
2. Click New, and choose Other Current Assets from the Account Type drop-down menu.
3. Select Retainage from the Detail Type drop-down list.
4. Enter the Name and Description. Then click Save and close.

Next, you can follow these steps to create a retainage item in the Products and Services page:

1. Click the Gear located in the upper right-hand corner and select Products and Services.
2. Click New, then select Service.
3. Enter the Name, Description, Rate, and put a check mark on the I sell this product/service to my customers box.
4. From the Income account drop-down menu, select the retainage account you've created.
5. Click Save and close.

Finally, include the retainage item on the invoice:

1. Go to + New > Invoice.
2. Select the customer's name, and add the invoice details.
3. Under Product/Service column, choose an item from the first line. Then, add the retainage item you've created on the second line.
4. In the RATE column, enter the amount of the retainage as a negative (-) number. If your retainage is a percentage, you must calculate this manually.
5. Click Save and Close.

I'm adding these articles that you can bookmark:

• Add an account to your chart of accounts in QuickBooks Online
• Add product and service items to QuickBooks Online

You can always get back here if you have additional questions or other concerns for QuickBooks Online. I'm always here to help. 

Thank you RenjolynC,

  I have a few questions.  

  The first is that I don't see the Other Current Assets, but maybe I need to create that Account Type.

  The second one is if we use this method, the amount Retain will appear in our Tax report along with the regular taxes.  

  Thanks again for your help.

Thanks for getting back to us, usercristian.

We can select the Current Assets instead of Other Current Assets. This way, the Retainage will be available under Detail Type.

Also, this retainage will only appear on a tax report once you've added a tax code or tax rate on the transaction. It will not reflect on the report if you'll leave it as blank or out of scope.

I've added these articles for more information about Retainage: 

• Record a retainer
• How to view your Retained Earnings account

Feel free to get back to me if there's anything that I can help. Stay safe!

Thanks for your reply Adrian, I have read the articles and I think it does not work for us.

I appreciate you for providing a screenshot and detailed information on what you see on your end, @CristianLeiva.

You can create a tax agency and custom tax rate so that they can add this tax rate to your transaction.

In the meantime, you can perform the following steps below depending on the sales tax settings you have.

Here's how to add an agency if you're using the manual sales tax:

1. From the left menu, select Taxes and click Sales Tax.
2. Under the Related Tasks list on the right, choose to Add/edit tax rates and agencies.
3. Select New and choose either a single or a combined tax rate.
4. Enter a name for the tax, the agency you pay, and the percentage for the rate. Use a single rate if you pay just one rate to a single agency.
5. Select Save.

For automated sales tax, you can perform the following steps below:

1. Go to the Taxes and click Sales Tax.
2. Under Shortcuts, choose Tell us where you collect tax.
3. Click the Add agency tab.
4. Choose your Agency, Filing frequency and Start of tax period.

As always, I'd suggest reaching out to your accountant on the best way to handle this situation. 

Just a heads-up, currently you're unable to delete a custom rate. You can refer to these articles for more insights on how the Automated Sales Tax feature works: 

• Use automated sales tax on an invoice or sales receipt
• Use custom rates to manually calculate taxes on invoices or receipts

Please let me know if you have any other questions by clicking the Reply button. I'd be always around to help.

Thanks again Grace,

  If I try to use the 10.75 % as a TAX it doesn't match the amount of retention that we need to pay (attached img).

  The result should be according to this amounts

If I use Inclusive or Exclusive of Tax, it doesn't work either.

I've tried creating a second row with the retention amount and it works, but that way I can't see that amount in our tax report, and when I go to make a payment of that Bill to our supplier, Quickbook ask for the full amount (including the retention).

And if we add a negative amount in the second row, the make payment works, but the retention doesn't show in our tax report either.

Do you know any other way to accomplish that?

Thanks for coming up with some workaround to apply the retention rate in your account, CristianLeiva. 

I appreciate you for performing the troubleshooting steps provided by my colleagues. Those solutions are for tracking your retainer and setting up custom rates to manually calculate taxes on invoices or receipts.

The retainer transaction you created is reflected in the Balance Sheet report. This allows you to see each customer's retainer or deposit balance, as well as a record of transactions that have affected this balance.

To use the 10.75 % as a Tax to match it in the amount of retention and to show it in the Tax report, it would be best to consult your accountant. They'll provide you details information on how to best handle this one in QuickBooks Online (QBO). 

Visit our QBO Tax Articles page fr more insights about managing your VAT. 

The Community will always have your back if you need anything else in running your business in QBO. Assistance is just one post away. Take care always.