Tax deduction at source

MohsinMohsin Member Posts: 1

Hi there,

How would I adjust tax deduction at source, deducted by my Customer in my ledger?

For example, I have a customer called ACME Inc.
I've invoiced them $100 and they have paid me $96. The rest of my payment was deducted by ACME Inc. to be paid to the tax man.
Now when I go to record payment, I could logically, mark $96, now I would like the $4 to be added to our Tax Asset against the customer.

Feel free to ask an question, if I'm not clear about my scenario.

Thanks,
Mohsin

Comments

  • ashash Member Posts: 1

    I am facing the same problem, myself. The balance shows up as overdue payment on the invoice which makes the dashboard a mess to manage.

    Is there a solution?

  • Tungsten_BondTungsten_Bond Member Posts: 5

    I think one of them folks in the chat would be able to suggest how you guys can sort this out.

  • MuhammadMuhammad Member Posts: 1

    I would be interested to see how we can sort this one out in Wave.

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Hi everyone! (pinging @Mohsin @ash @Tungsten_Bond @Muhammad)

    There are a few steps involved, but that taxes deducted at source is something that can be accounted for in Wave. Here's how you do it.

    Adding a "Taxes deducted at source" payment account

    • Click on Chart of Accounts, under Accounting
    • Click on Add an account
    • Under the Asset tab, choose Bank & Cash
    • Name the account TDS

    Entering the income for the received payment

    • On the invoice page, click on the Record a payment button, on the right of your invoice.
    • Enter the payment received (following @Mohsin's example, $96), and choose the bank account where that was deposited.

    Entering the tax deduction as source

    • On the invoice page, record another payment to your partially paid invoice.
    • Enter the amount of taxes deducted at source (here, $4) and choose TDS as your payment account.
  • Tungsten_BondTungsten_Bond Member Posts: 5

    I will give this a go.

    Cheers, Alexia! :)

  • Tungsten_BondTungsten_Bond Member Posts: 5

    Just to confirm this approach works.

    Cheers, Alexia. :)

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Happy to hear that, @Tungsten_Bond!

  • MetalheadMetalhead Member Posts: 1

    Hi,

    If that is the case for tax deduction when I send the Invoice.
    What would be the process for tax deduction when I make payment for the Invoice? Is it to record under liabilities?
    Tx

  • SamdSamd Member Posts: 552 ✭✭✭

    Hey @Metalhead, depending on when you remit taxes, you could assign tax you owe to a Tax Liability account in Wave. This will help you track what is owed as well. The tax payments themselves can be recorded as tax expense transactions.

Sign In or Register to comment.