Compounding Taxes
The following is a detailed example of how to compound or "piggy back" taxes in RDP. The purpose being a tax/gratuity/resort fee needs to be charged on X dollar amount and then another tax charged on top of that total. Example:
| Tax % | Description | General Ledger |
|---|---|---|
| 16% | Gratuity | 21001 |
|
5.5% |
State Tax | 21003 |
| 1.0% | Local Tax | 21004 |
To calculate the compounded tax rate, lets use a $100.00 component.
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16% Gratuity is calculated first on the $100 component
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5.5% State Tax is then calculated on the component + gratuity
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1.0% Local Tax is then calculated on the component + gratuity
Now let's do the math:
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Calculate the gratuity on $100.00: $100.00 x .16 = $16.00
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Add the gratuity to the component: $100.00 + $16.00 = $116.00
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Calculate the compounded state tax on $116.00: $116.00 x .055 = $6.38 (6.38%)
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Calculate the compounded local tax on the $116.00: $116.00 x .01 = $1.16 (1.16%)
The total tax (and therefore compounded percentages) that will be entered into the C7TC table are:
| Subrecord | TAX1 - 21001 Gratuity (bucket 7) | TAX2 - Not in Use (bucket 7) | TAX3 - 21003 State Tax (bucket 8) | TAX4 - 21004 Local Tax (bucket 8) | Description |
|---|---|---|---|---|---|
| TA01 | 16 | 0 | 6.38 | 1.16 | Gratuity, State & Local |
| TA02 | 16 | 0 | 0 | 0 | Gratuity Only |
| TA03 | 0 | 0 | 5.5 | 1.0 | State & Local Only |
| TA99 | 0 | 0 | 0 | 0 | No Gratuity, No Tax |