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benedetti
September 26, 2019
Question

How do I enter an expense which is only partially tax-deductible? e.g. I can deduct only 40% of the 22% VAT on gas.

  • September 26, 2019
  • 2 replies
  • 0 views

Let's say I'm buying gas. In Italy that's taxed with a 22% VAT, but only 40% of that is deductible. I need the full 22% to show in the invoice. When I file my taxes, in the total amount of deductible taxes, I need to consider only the deductible percentage instead. So 40% of the 22% VAT.


2 replies

Rajanikanth
Rajanikanth
September 26, 2019

Hi, benedetti

When creating a Bill / Expense enter the 40% of VAT and balance amount as unclaimed VAT item/account

Comment back for further clarifications / to discuss.



B
benedettiAuthor
September 26, 2019
Thank you. Just to be clear: you're suggesting a workaround, right?
If I understood correctly, when I have an expense which is only partially tax-deductible I should calculate manually the deductible percentage of the VAT and enter another fake item with that amount. But what about when I'm filing taxes? I think this way QBO wouldn't be able to correctly add things up in the report, would it?
Graceman
Graceman
September 26, 2019

Create new tax codes for the recoverable & unrecoverable post the unrecoverable to vat unrecoverable new expense account. Now create a new group vat rate for the full taxable amount and add in the two new vat codes recoverable & unrecoverable.

Now apply the group rate the unrecoverable amount gets posted to expense and the recoverable get posted to the vat agency.

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