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 Administrator Posts: 3,315 admin

    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 Administrator Posts: 3,315 admin

    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 Administrator Posts: 560 admin

    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.

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