Sometimes receipts from restaurants will total the meal, plus any taxes, and then a tip to the staff. The food cost itself and any taxes are usually listed on a receipt, while the tip and total is listed on a credit card slip.
When submitting to Dext, it’s best to take one picture of the two of these slips side-by-side. This way, the platform will extract the full total, as well as the tax amount.
You can split out the taxes and the tip by following these steps:
- Click into the item you’re wanting to split the taxes for.
- On the Item details page, click the Create line items button.
- Click the + Add newline item button twice to add two separate lines
- Enter the lines below as follows:
- Line 1 (this will be for the meal): Select Extracted amount from the tax drop-down and type in the tax amount.
- Line 2 (this line will be for the tip):Select a 0% tax rate from the drop-down list.
- Ensure the totals from the Line items column match the totals from the Item column.
- Click Done and you’ll then be able to publish your document. The tax amount will be sent to your accounting software correctly
For Canadian customers using QuickBooks Online
In Canada, the maximum amount you can claim for food, beverages, and entertainment expenses is generally 50 percent of the amount incurred. For income tax purposes, taxes and tips are included in the cost of food and beverages and are also subject to this 50% rule.
Because of this, in QuickBooks Online, you’ll need to create a separate Custom Tax rate for meals in QuickBooks Online. Please see this article for more details on this.
Dext is currently unable to extract the tip line and break out taxes accordingly for meals/tips.
However, the platform can extract the total tax amount and then you’re able to create new line items to split out the meal and the tip.
Follow the steps below to get this tip amount included and exempt:
- Leave the tax field on : Extracted amount.
- Click on the Create Line Item button.
- On the first line, enter the total amount of the meal (including taxes).
- Select the custom group tax code created in QuickBooks Online.
- Click the + Add a New Line button to add this new line of information.
- Name the tip and add the amount, making it exempt.