Infidocs Technologies || Withholding Tax Payables ||

Account Payables - Withholding Tax

 

Withholding tax is the amount withheld by the party making a payment to another (payee) and paid to the taxation authorities. The amount the payer deducts may vary, depending on the nature of the product or service being paid for. The payee is assessed on the gross amount, and the tax to be withheld (the withholding tax) is computed in that assessment. 

The purpose of withholding tax is to facilitate or accelerate collection, by collecting tax from payers rather than a much greater number of payees, and by collecting tax from payers within the jurisdiction rather than payees who may be outside the jurisdiction.

 

Withholding Tax Payables Options

 

Use Withholding Tax. Select this option to enable Automatic Withholding Tax. If you enable this option, you have the option to allow your suppliers and supplier sites to be subject to withholding tax.

Allow Manual Withholding. Enable this option to allow manual creation and adjustments of Withholding Tax type distributions for your invoices.

Tax Group. The name of the withholding tax group that you would like to use as the default withholding tax group for the new suppliers you enter.

Apply Withholding Tax. Select the time at which you would like Payables to apply withholding taxes to your supplier's invoices:

Never.

At Invoice Validation Time.

Note: If Payables withholds tax at Invoice Validation, it calculates withholding only once. If you adjust an invoice after you submit Invoice Validation, then you need to manually adjust the withholding tax

At Payment Time. When you create payments in a payment batch or with a Quick payment.

Withholding Amount Basis.

Include Discount Amount. Payables include the invoice discount amount when it calculates withholding tax amounts for the invoice.

Include Tax Amount. Payables include the invoice tax amount when it calculates withholding tax amounts for the invoice.

Create Withholding Invoice. Select the time at which you would like Payables to automatically create withholding tax invoices to remit withheld taxes to tax authorities:

Never. You can create a withholding type tax code without entering a tax authority. However, if you change to an option other than Never, you will need to manually ensure that each withholding type tax code has an associated tax authority.

At Invoice Validation Time.

At Payment Time

Include Income Tax Type on Withholding Distributions. If you enable this option then you can report on federal income tax withheld (MISC4) for 1099 suppliers.

When this option is enabled, then when Payables automatically creates distributions of type Withholding Tax for 1099 reportable suppliers, Payables automatically provides the following values:

Income Tax Type value of MISC4.

Income Tax Region value, if the Combined Filing Payables option is enabled.

Note: Payables provides these values only for distributions it creates automatically. If you create a Withholding Tax distribution manually, then you need to enter these values manually.

When you enable this option, Payables initiates the Update 1099 Withholding Tax Distributions program, which updates these values on existing Withholding Tax distributions. The program selects distributions to update as follows:

If the current date is before March 1 of the current calendar year then the program updates distributions with a payment date of January 1 of the previous calendar year or later.

If the current date is March 1 of the current calendar year or later, then the program updates distributions that have a payment date of January 1 of the current year or later

N: - Setup-> Options-> Payables Options

Enable Use Withholding Tax and Allow Manual Withholding

Enter Tax Group Name as Ivas_WT

Select Radio Button at Invoice Validation Time for

• Apply Withholding Tax
• and Create Withholding Invoice

 

Save and Close

 

N: - Invoices-> Entry-> Invoices

Withholding Tax Invoice

Enter the supplier and at least one pay site in the Suppliers window.

v  To enter a basic invoice:

      1.       In the Invoices window choose Standard or Mixed for the invoice Type.

2.       Enter the Supplier or Supplier Number.

3.       Enter the Supplier Site to which you will send payment of the invoice. Payables will print the address for this site on the payment.

4.       Enter the Invoice Date or accept the Payables default (today's date) by choosing [TAB].

 Payables may use the invoice date you enter as the Terms Date and GL Date default for an     invoice, depending on how your Payables Options and Defaults are set up.

 If your GL Date Basis Payable Option is set to Invoice (Date), you must enter an invoice   date that is in an open or future period.

5.       Enter the Invoice Number from the invoice your supplier sent you or accept the Payables default (today's date) by choosing [TAB]. Payables will not allow you to enter duplicate invoice numbers for the same supplier.

 

Suggestion: 

You may want to use an invoice numbering convention that minimizes the risk of separate entries of the same invoice under different invoice numbers. For example, if you consistently enter alphanumeric invoice numbers in upper case you would enter an invoice number only as ABC123, and not also as abc123.

Enter the full Invoice Amount including tax, freight and miscellaneous charges.

 

6.       Enter the Description of your invoice. This will appear on your payment document and may appear in your general ledger.

7.       Enter distributions automatically by entering a Distribution Set, or choose the Distributions button and enter the distributions manually.

8.       Payables automatically schedules payment of the invoice using the Invoice Amount, Payment Terms, and Terms Date. Enter or review the defaults for these fields.

9. Save your work.