Calculating Taxes in Core

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These three scenarios explain how Core charges tax for time entries recorded against the projects. The same applies to the expense entries.

  • Scenario 1: You are charging individual time entries for the same project at different tax rates.
  • Scenario 2: You are charging all time entries for the same project at the same tax rate.
  • Scenario 3: You are applying multiple tax rates to time entries and the ‘tax is taxed’.

Core provides you the option to exempt projects from item taxes (Tax 1/2/3) and also main taxes (MST) to exclude item taxes.

  • Scenario 1: You have applied different tax rates to time entries for the same project. Let us assume you have entered 1 hour for each activity and $100 as Bill Rate for each entry.

    Time entry with activity A; Tax 1 = 10% is charged
    Time entry with activity B; two taxes are charged, Tax 1= 20% and Tax 2 = 30%
    Time entry with activity C; three taxes are charged, Tax 1 = 10%, Tax 2 = 20% and Tax 3 = 30%

    Activity A: 1 hour x $100 x 1.1 = $110
    Activity B: 1 hour x $100 x (1.2 + 0.3) = $150
    Activity C: 1 hour x $100 x (1.1 + 0.2 + 0.3) = $160

    The resulting due amount on the invoice will be $300 service + $120 service tax = $420

    Core taxes each time entry individually. In addition, when there is more than one tax, it sums them up before applying to the entry.
  • Scenario 2: You have taxed all time entries at a single main tax rate for the same project. Let us assume you have entered 3 hours for activity and $100 as the Bill Rate for each entry.

    Main Service Tax= 10%
    Activity: (3 hours x $100) x 1.1 = $330

    The resulting due amount on the invoice will be $300 service + $30 main service tax= $330

    Core applies the main tax after computing the total labor amount. If you tax a standard tax rate on all labor and expense, enter it as the Main Service Tax in the Global Settings screen. Core brings forward these values when creating new clients and subsequent projects. 
  • Scenario 3: You have applied multiple taxes to time entries and the ‘tax is taxed’ for the same project. Let us combine scenario 1 and 2. The individual time entries are taxed based on the activity (Scenario 1) and then that total amount is taxed (Scenario 2).

    Activity A: 1 hour x $100 x 1.1 = $110
    Activity B: 1 hour x $100 x (1.2 + 0.3) = $150
    Activity C: 1 hour x $100 x (1.1 + 0.2 + 0.3) = $160

    The resulting due amount on the invoice will be $300 service + $120 service tax = $420

    Total Service + 10% MST: $420 x 1.1 = $462

    The resulting total due amount on the invoice will be $462.
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