Withholding Tax

[Maf. King]

On Thursday 07 December 2006 08:24, Paul Ogilvie wrote:

> An example:
>
> If I worked 8hrs at $16 and my withholding tax was 20%,
>
> Then
> Income Before tax would be: 16*8 = $128
> Withholding Tax would be: 20% of 128 =$25.6
> And Imcome After tax would be 128-25.6 = $102.4
>
> What I get in Gnucash is it adding my tax to my income thus it thinks I
> earned 128+25.6 = $153.6 which is wrong.
>
> Any advice would be greatfully accepted
>
> Regards
> Paul
>

Hi Paul,

Whilst this may not be of much help to you, I think that GC is actually 
correct, in strict accountancy terms, at least.  It is income, and tax is a 
liability as a result of that income - you just never see the tax money...

If the withholding rate were changed part way through a tax year (ok, 
hypothetically), then would your _income_ change?  Sure your bank balance/net 
worth would change, but isn't that is due to a change in your tax liability, 
not your income?

Hmm, re-reading your post, I think I missed the point of your question?
Are you using GC to generate the invoices using the Business menu?  If so, try 
Edit -> Prefs -> business -> checkbox for "Tax Included" may be your friend. 
(you can do this on a per-customer basis too, in the Edit Customer -> Payment 
Info dialogue.)  

BTW, IANAA!

HTH
Maf.