Which lines are taxed
Track and Invoice taxes a line only when Taxable is on. It does not choose that for you. Check with a tax professional about which lines should be taxed.
- Goods starts with Taxable on. Professional Services and Expenses start with Taxable off. You can turn the switch either way on the item or on the invoice line.
- Reimbursable Purchases are never taxed. The switch is hidden, and saving the line keeps tax off.
- A time entry starts with Taxable off. The note says Apply tax to this time when invoiced. Turn it on if this time should be taxed. On an invoice, a Time line has the same Taxable switch.
- When Taxable is on, set Sales Tax Rate (%) if this line should not use the invoice rate. See how to set up sales tax.
On the invoice, Invoice Subtotal is the lines before tax. The Sales tax row is the tax on lines that have Taxable on. Lines with Taxable off are in the subtotal and are not in the tax.
On Reports, Sales tax summary shows Taxable amount and Tax charged. Taxable sales detail shows Taxable Sales and Non-Taxable Sales. Those are the taxed and untaxed parts of issued invoices. There is no column named Taxable Subtotal.
What your client sees
The client sees the line amounts, Invoice Subtotal, and Sales tax when the tax is more than zero. They do not see the Taxable switch.
Common questions
Tax uses the lines that still have Taxable on. Also check that you saved the invoice. A sent invoice keeps the tax that was already saved until you are editing a draft.
Billable decides whether the work can go on an invoice. Taxable decides whether a line on the invoice is included in Sales tax.
Open Reports, then Sales tax summary or Taxable sales detail. If the period has no taxed invoices, sales tax says No taxable invoices in this period.
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