Canadian Tax deducted from payment for services rendered

How do I book this payment of Canadian Tax?

Category for Estimated/Federal Taxes Paid

by Linda
(NC)

For a small business on Schedule C, when Federal and Estimated Taxes are paid during the year, what is the Expense/Category in bookkeeping? Are these payments taken as deductions on Schedule C?

For Sole Proprietors (small business Schedule C), Federal and Estimated Taxes paid during the year should be categorized as an Owner's Draw (which will show on the Balance Sheet) with subcategories for Federal Payments and State Payments.

Example:
Owner's Draw: Federal Payments
Owner's Draw: State Payments

These payments are not taken as deductions on Schedule C, but should be entered and show up on the Federal and State tax forms as estimated payments made. (For Federal Form 1040, this would be line 63 "2008 estimated tax payments and amount applied from 2007 return").

Payment of Pro-rated Real Estate Taxes With Your Rent

by Edward
(Reston, Virginia, USA)

SLH-student-Reston

Studing accounting I understand the payment of the monthly rent. Also the landlord is charging once a year, the tenant's portion of the real estate taxes. Do I charge this taxes to RENT or to TAXES? Please advise.

Edward



Hi Edward,

Thank you for your question.

I believe any payments received from the tenant would be charged to rent as the landlord will need to report all monies received (other than deposits) as income.

The landlord would then deduct the full amount of real estate taxes paid in the year as an expense against the income.

Sales Tax & Customer Returns

by Anna
(North Carolina)

A customer has returned an item ( price and sales tax). The client wrote a check to the customer for the refund. My client uses specialized journals.

I just finishied my bookkeeping class on-line and there was very little information given when you have a company using sales tax / merchandising accounts.

My question is in two parts..

1) when recording the refund payment in the cash payments journal, will I seperate the sale amount and sales tax on to two separate lines, since she has one ledger for sales returns and one for sales tax ?

2) Will this refund of sales tax be put into the sales tax journal as a credit?

Hello Anna,

Thank you for your inquiry.

1) Since she has one ledger for sales returns and one for sales tax, you should go ahead and separate the two amounts.

2) The refund of sales tax be entered as a debit along with the Sales Returns.

Good question!

VAT

What does VAT mean?

What taxes must be claimed when selling personal items.

by Thomas
(Harrisburg,PA)

I have accumulated a large quanity of computer parts over the past 20 years. I am located in the state of PA and have sold the parts to a tax exempt reselling company (a copy of the tax exempt cert has been provided by the buyer)in the state of FL. The total value of the sale was $12,000.

Can you tell me what if any taxes I would owe the state of PA for this transaction?

Hello Thomas,

Thank you for your question.

Sales tax is only owed to the state when charged to a customer. Since your customer was exempt from sales tax and you didn't charge sales tax, you do not owe the state any sales tax on the transaction.

However; As you received $12,000 for the sale of computer parts, you will owe the state of PA income tax on the 12,000 (minus any expenses). The personal income tax rate in 2007 was 3.07%, so you would owe appoximately $368.