A guide for tracking Use tax in Dynamics GP

Transcription

1 A guide for tracking Use tax in Dynamics GP This method tracks the tax liability in the General Ledger for those invoices that need reported to the state on a monthly basis. Then with the use of SmartList reports the state and municipality liability is easily mined from GP. <MORE INFO NEEDED> Set up: This method of tracking requires some setup in the administration panel in GP. First, open the company window and click on the Options button on the lower right-hand side of the window. Scroll through the options and check the Enable Reverse Charge Taxes option. Marking this box allows a negative tax rate to be created in in GP. GL Codes: it is recommended that the GL be set up to have one tax expense account and liability accounts for the state and cities separately XXX-XX 2040-XXX-XX State 2041-XXX-XX City XXX-XX City 2 and so on The next step in the set-up is creating the tax schedules in GP. Navigate to the tax details window located below the company set up window in GP. Here is where set up of the combined State & City rates and reversing state and city rates occurs.

2 First create all the combined State and city tax schedules it may be easier to mark these with a (+) symbol for data entry ease. (AZ/GILBERT +) Enter a description, set the type to purchases, enter the tax account expense account for the positive tax schedules, and enter the tax rate 7.1%. Save and make the corresponding reversing tax rates for the combined schedules.

3 Continue setting up the combined rates and the corresponding negative offsets until all of the municipalities are set up. Transaction Entry Open the transaction entry window or receiving transaction entry window depending on the type of invoice being paid. Enter the invoice information like normal. In the tax amount entry field click on the blue arrow located to the right of the tax entry field. Doing this opens the Tax entry window where the tax schedules are selected and the amounts are calculated.

4 Notice how the tax is calculated for the purchases amount and the negative tax rates back out the tax amount to the state and the city. **Check if the tax difference is not zero, then there is an error in one of the rates that will need to be corrected. Using this tax entry method keeps the invoice amount the same while recording the tax and corresponding liability for the invoice. This what the distributions for the transaction will look like.

5 Reporting For reporting the tax liability there are couple ways that can be used to get the amounts needed for the state and city returns. Method one: Backing into the total gross amount This method you can use the trail balance report or SmartList to get the tax liability amounts for the month and back into the gross amount for reporting purposes. Journal Entry TRX Date Number Description Debit Credit Source Document Originating Master Name Originating Document Number /20/ Sales/use tax $0.00 $84.00 PMTRX Cardinal Health 123PHX /20/ Use tax PHX $0.00 $30.00 PMTRX Cardinal Health 123PHX /20/ Sales/use tax $0.00 $ PMTRX MicroAge A Frontier /20/ sales & use tax $0.00 $65.00 PMTRX MicroAge A Frontier Fountain Hills /20/ Sales/Use tax $0.00 $28.00 PMTRX Provantage GMC /20/ Sales & use tax $0.00 $7.50 PMTRX Provantage GMC1 Gilbert /20/ Sales/use tax $0.00 $ PMTRX MicroAge A Frontier /20/ Sales & use tax $0.00 $ PMTRX MicroAge A Frontier /20/ Sales/use tax $0.00 $98.00 PMTRX Provantage SCOTTSDALE /20/ Use tax $0.00 $25.38 PMTRX Provantage SCOTTSDALE-2 Scottsdale /20/ Sales/use tax $0.00 $16.80 PMTRX Provantage TEST /20/ Use tax - Scottsdale $0.00 $4.35 PMTRX Provantage TEST1 Gross Tax 12, $ State tax $7.50 Gilbert 1, $30.00 PHX 6, $ , $65.00 FTH 2, $29.73 Scottsdale Backing into the tax amount is done by dividing the tax amount by the tax rate = 12,780 this method works well for all tax rates there are some exceptions such as Scottsdale their rate is.0145 half percentage can create a rounding issue.

6 Method Two: SmartList reporting and filtering transactions This method uses a SmartList in the financial folder> transactions> Use tax report. This report combines all transactions for that month and is sorted by document number. After the report is placed into excel there will be some filtering needed to delete out the transactions that don t have a tax liability paired to the expense transaction. The example below shows what the cleaned up file looks like. At this point the state tax gross amount is figured by summing the debit column. For calculating the tax liability, sum all the credit transactions in the account A simple check of this is to multiply the sum of the debit column with.056; this should display the correct tax amount if the file was cleaned up appropriately. Journal Entry TRX Date Number Description Debit Credit Originating Master Name /20/ Computer $1, $0.00 Cardinal Health 123PHX /20/ Sales/use tax $0.00 $84.00 Cardinal Health 123PHX /20/ Use tax PHX $0.00 $30.00 Cardinal Health 123PHX /20/ Computer $2, $0.00 MicroAge A Frontier /20/ Sales/use tax $0.00 $ MicroAge A Frontier /20/ sales & use tax $0.00 $65.00 MicroAge A Frontier Fountain Hills /20/ Computer $ $0.00 Provantage GMC /20/ Sales/use tax $0.00 $28.00 Provantage GMC1 Originating Document Number /20/ Sales & use tax Gilbert $0.00 $7.50 Provantage GMC1

7 200 11/20/ Computer $6, $0.00 MicroAge A Frontier /20/ Sales/use tax $0.00 $ MicroAge A Frontier /20/ Sales & use tax $0.00 $ MicroAge A Frontier /20/ Computer $1, $0.00 Provantage SCOTTSDALE /20/ Sales/use tax $0.00 $98.00 Provantage SCOTTSDALE /20/ Use tax - $0.00 $25.38 Provantage SCOTTSDALE-2 Scottsdale /20/ Computer $ $0.00 Provantage TEST /20/ Sales/use tax $0.00 $16.80 Provantage TEST /20/ Use tax - Scottsdale- - $0.00 $4.35 Provantage TEST1 Gross $12, Tax $ State tax $ $7.50 Gilbert $1, $30.00 PHX $6, $ $2, $65.00 FTH $2, $29.73 Scottsdale