We can use a credit note to charge off the withholding tax as an expense to configure the Fee Receipts, Mario. I'm here to go into detail to help you navigate through this process.
To start, we can set up a withholding tax expense account which is crucial for tracking the amounts withheld from your invoice payments. To do that, here's how:
- Go to Settings, then Chart of accounts.
- Click New.
- Choose Other Expense from the Account Type dropdown.
- From Detail Type dropdown, then Other Expense.
- Use Withholding Tax Expense as the account name, then click Save.
Next, we'll create a withholding tax item, which allows you to link the withholding tax to the appropriate expense account.
- Select the Gear icon, then Products & services.
- Click New, then Service.
- Use Withholding Tax as an item name.
- Choose the withholding tax expense account you've created from the Income account dropdown.
- Select Save and close once done.
We can then move on to creating a credit note and applying it to the invoice payment. To get step-by-step guidance, please check out this article: How do I record tax withheld by my customer?
Furthermore, you might want to scan this resource for guidance on reviewing transactions included in each box on the tax return base in your tax settings: Tax Detail Report.
Don’t hesitate to leave a comment on this post if you have further questions regarding withholding taxes or other related issues in QuickBooks Online. We’re always here to assist.
