How do I properly charge sales tax on a final payment when there is a non-taxable deposit involved?

[DCArtGlass]

I run a small art glass studio where I have clients who make 50% non-sales-taxable deposits on commissions with the balance due upon completion of the project. Using the Square app on my phone, I understand how to process the initial deposit without charging the customer sales tax. That is, when entering the 50% deposit in the Square app, I tap "Current Sale" at the top of the screen and then delete the sales tax line.

However, once the project is complete, and the customer returns to make the final payment, how do I charge them sales tax on the entire value? There only seems to be an option to charge sales tax on the current amount being processed (the second %50). There's a similar problem when trying to create a final invoice to email a client.

EXAMPLE - $1,000 Commission:
Initial Deposit: $500 (or, 50% of $1,000). No sales tax is collected at this time because no exchange of goods.
Final Payment Upon Completion/Delivery of Project: $560 Balance Due (or, ($1,000 x 1.06 sales tax) - $500 deposit = $560). However, the system only applies the 6% sales tax to the second payment of $500, which totals $530 ($30 short).

For the final payment, there doesn't seem to be a way to enter the total value ($1,000) so the sales tax can be properly applied and then subtract a deposit ($500) without reducing the application of sales tax.

Please advise. Thank you for your help.

[nika]

Thanks for joining the Seller Community @DCArtGlass! Happy to have you here. 🙂 And thank you for sharing that example so we can get a better understanding of what it is you're looking to do.

In short- what you're looking to do is a feature request. In order to charge tax based on the full amount of the transaction after you take a deposit with no tax attached, you'd have to manually calculate the total tax and add it to the sale.

I'm sorry the solution isn't great or easy, for that matter. I've flagged this as a feature request to our Product team so they can be made aware. If anything else comes up or you have other questions about this particular limitation, don't hesitate to reach back out.

[DCArtGlass]

Thank you for your response. I'm dissapointed to hear there isn't a solution to this issue. I look forward to when Square has developed their system to accommodate the proper sale tax application to deposit sales. Best regards.

[Joe]

Thanks for the quick response here, @DCArtGlass. We will be sure to update you down the road when there is more info to share.

Cheers!

[luciotti]

Just going through this myself, as I almost sold myself short by $100 the other day and also did not make a good impression on a customer. This is not really a feature request, it should be by default, because technically speaking the IRS requires you to charge sales taxes on the original amount, not on the difference. Square should have caught on by now.