With-holding Tax set up with Transaction

With-holding Tax(WHT)

Definition of 'Withholding Tax'

An amount of an employees income that an employer sends directly to the federal, state, or local tax authority as partial payment of that individual's tax liability for the year. When a person starts a new job, he/she is required to fill out a W4-FORM on which he/she can indicate his/her filling status and the number of allowances he/she is claiming. also called withholding.

1. Income tax withheld from employees' wages and paid directly to the government by the employer.

2. A tax levied on income (interest and dividends) from securities owned by a non-resident.

3. The amount withheld is a credit against the income taxes the employee must pay during the year. 
 

4. Tax is deducted not only from dividends, but from other income paid to non-residents of a country.

Set up with transaction step by step:-

1.      Creation of supplier as Tax Authority and Suppliers Site

2. Creation of With-holding Tax codes

 

3.With-holding tax Groups

 

4. Payable Option setup-With-holding tax tab

 

5.Supplier Level changes - Tick on Allow With-holding Tax

 

Site wise also we have to tick Allow tax withholding

 

6.Make a invoice and attach the WHT group at distribution level

Validate the invoice then with hold tax amount will come to the with-holding column