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Withholding Tax Types and Withholding Tax Code

Good Afternoon SAP Guru's

I need some help with a very basic question. I need to configure WHT and EWHT for 1099 and 1042. I am in the US. Here is the configuration I completed so far which I hope is appropriate. Please tell me if it not.

SPRO for EWHT

Maintain Country

Define Reason for Exemption

*is this needed for 1099 not withholding?

Maintain Recipient Type

Define WHT keys

Check Recipient Types

*1042 only?

WHT type for invoice posting

*created I1 for WHT type for Invoice Posting

WHT type for payment posting

*created 42 for 1042

*created ST for 1099 State

*created FE for 1099 Federal

Define Rounding Rule for WHT

*is this necessary

Assign Condition Type to WHT type

*what is this for?

My big issue is that I am confused on Tax Type and Tax Code.

I believe it is required to have 3 tax types for invoice posting and 3 for payment posting? I have 3 scenarios each. They are as mentioned earlier

1099- not withholding

1099- withholding

1042- withholding

I haven't configured 3 tax types for invoice posting, only 1 at this time.

For tax code, I struggle with the tax code field because the field is only 2 positions and therefore, how do I differentiate the different codes listed on the 1099 and 1042 on here? There are 18 codes on a 1099 and 50 on a 1042. Any suggestions?

Do I need to enter 1099 codes twice because one is exempt and the other is withholding? Or is that the reason why I need to create a exemption reason code for WHT type?

Any help would be greatly appreciated.

Thanks!

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  • Posted on Sep 30, 2009 at 03:58 PM

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