Tax Reports: Examples

North America—United States and Canada

Example 1: One Tax Applied to All Items

A merchant has one tax rate applied uniformly to all items. One tax, taxable amount matches sub-total of prices on the order.

Order

Item	Price	Tax	Tax rate	Tax collected	Subtotal
Wrench	$10.00	Multnomah County	5%	$0.50	$10.50
Hammer	$10.00	Multnomah County	5%	$0.50	$10.50
Total	$20.00			$1.00	$21.00

Payment table

Amount	Tax amount
$21.00	$1.00

Payment tax rate table

Taxable amount	Tax	Tax rate
$20.00	Multnomah County	5%

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	$20.00	Multnomah County	5%	$1.00
Net	$20.00			$1.00

Example 2: Two items have different tax rates

Wheat has a 10% wheat tax, and butter has a 5% butter tax. The net taxable amount is the same as the subtotal of the prices on the order.

Order

Item	Price	Tax	Tax rate	Tax collected	Subtotal
Wheat	$10.00	Wheat tax	10%	$1.00	$11.00
Butter	$10.00	Butter tax	5%	$0.50	$10.50
Total	$20.00			$1.50	$21.50

Payment table

Amount	Tax amount
$21.50	$1.50

Payment tax rate table

Taxable amount	Tax	Tax rate
$10.00	Wheat tax	10%
$10.00	Butter tax	5%

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	$10.00	Wheat tax	10%	$1.00
	$10.00	Butter tax	5%	$0.50
Net	$20.00			$1.50

Example 3: Two Default Taxes

Each item gets the same two taxes. The net taxable amount is NOT the sum of taxable amounts in the Payment tax rate table.

Order

Item	Price	Tax	Tax rate	Tax collected	Subtotal
Wrench	$10.00	Multnomah County	5%	$0.50	$11.50
		Oregon state	10%	$1.00
Hammer	$10.00	Multnomah County	5%	$0.50	$11.50
		Oregon state	10%	$1.00
Total	$20.00			$3.00	$23.00

Payment table

Amount	Tax amount
$23.00	$3.00

Payment tax rate table

Taxable amount	Tax	Tax rate
$20.00	Multnomah County	5%
$20.00	Oregon state	10%

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	$20.00	Multnomah County	5%	$1.00
	$20.00	Oregon state	10%	$2.00
Net	$20.00			$3.00

Example 4: Two Items with Same Tax, One Item has a Special Tax

Both the items have the same tax rate, but one of the items has a special tax rate.

Order

Item	Price	Tax	Tax rate	Tax collected	Subtotal
Wrench	$10.00	Multnomah County	5%	$0.50	$11.50
		Wrench tax	10%	$1.00
Hammer	$10.00	Multnomah County	5%	$0.50	$10.50
Total	$20.00			$2.00	$22.00

Payment table

Amount	Tax amount
$22.00	$2.00

Payment tax rate table

Taxable amount	Tax	Tax rate
$20.00	Multnomah County	5%
$10.00	Wrench tax	10%

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	$20.00	Multnomah County	5%	$1.00
	$10.00	Wrench tax	10%	$1.00
Net	$20.00			$2.00

📘
NOTE
Since the Wrench tax does not apply to the Hammer item, the Wrench tax does not contribute to the Net amount in the Tax report.

Example 5: Items with Zero Tax or Merchants are Tax Exempt

Mark items with no tax as a 0% "No Tax Applied" tax. Merchants, such as nonprofits or schools, who are tax-exempt can remove tax from an order.

Order 1

Item	Price	Tax	Tax rate	Tax collected	Subtotal	Tax removed
Delivery charge	$10.00	No tax applied	0%	$0.00	$10.00	False
Hammer	$10.00	Multnomah County	5%	$0.50	$10.50	False
Total	$20.00			$0.50	$20.50	False

Order 2

Item	Price	Tax	Tax rate	Tax collected	Subtotal	Tax removed
Delivery charge	$10.00	No tax applied	0%	$0.00	$10.00	False
Total	$10.00			$0.00	$10.00	False

Order 3 (Tax-exempt merchant)

Item	Price	Tax	Tax rate	Tax collected	Subtotal	Tax removed
Wrench	$10.00	-	-	-	$10.00	True
Hammer	$10.00	-	-	-	$10.00	True
Total	$20.00	-	-	-	$20.00	True

Payment table

Amount	Tax	Tax amount
$20.00	Multnomah County	$0.50
$10.00	Wrench tax	$0.00

Payment tax rate table

Order	Taxable amount	Tax	Tax rate
1	$10.00	Multnomah County	5%
1	$10.00	No tax applied	0%
2	$10.00	No tax applied	0%

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	$10.00	Multnomah County	5%	$0.50
	$20.00	No tax applied	0%	$0.00
	$10.00	Tax removed	0%	$0.00
Net	$50.00			$0.50

Example 6: VAT (Value Added Tax)

With VAT, an advertised price of the item includes the tax rather than adding tax to the order total at the time of payment. Clover saves the advertised price with VAT as the taxable amount.

For example, if a pair of socks is advertised in Ireland at €6 and the VAT is 20%, the customer pays the €6 and the merchant revenue is €5. The collected tax is €1 (€5 x 20%). Clover saves the advertised price of €6 and the 20% VAT value.

Order

Item	Advertised price	Revenue	Tax	Tax rate	Tax collected	Subtotal
Socks	€6.00	€5.00	Ireland tax	20%	€1.00	€6.00
Total	€6.00				€1.00	€6.00

Payment table

Amount	Tax amount
€6.00	€1.00

Payment tax rate table

Taxable amount	Tax	Tax rate	Tax paid
€6.00	Ireland tax	20%	€1.00

Tax report

	Taxable amount	Tax	Tax rate	Tax collected
Payments	€6.00	Ireland tax	20%	€6.00
Net	€6.00			€1.00

Example 7: VAT, Multiple Rates Per Item

Socks are advertised for €6. There are two VAT rates: 15% and 5%.

Calculation

Revenue = €6 ÷ (1 + 0.15 + 0.05) = €5
15% tax = €5 x 0.15 = €0.75
5% tax = €5 x 0.05 = €0.25
Total tax = €0.75 + 0.25 = €1.00

Order

Item	Tax	Tax Rate	Subtotal
Socks	Ireland Tax	15%	€6
	Dublin Tax	5%
Total			€6

Payment table

Amount	Tax Amount
€6	€1.00

Payment tax rate table

Taxable Amount	Tax	Tax Rate	Tax Paid
€6.00	Ireland Tax	15%	€0.75
€6.00	Dublin Tax	5%	€0.25

Tax report

	Taxable Amount	Tax	Tax Rate	Tax Collected
Payments	€6.00	Ireland Tax	15%	€0.78
	€6.00	Dublin Tax	5%	€0.29
Net	€6.00			€1.07

Example 8: Two Different Rate Objects with the Same Rate on the Same Order

A merchant has accidentally built their inventory using two 13.5% tax rate rows for the same tax and has assigned items to both tax rates.

The order Includes:

€4 bottle of water at a 13.5% rate #1
€4 espresso at a 13.5% rate #2

With two different rates on the same order, Clover combines subtotals for each tax entity and separately rounds on a lower subtotal for the items taxed at each rate. Since the merchant is in Ireland, a VAT is included.

The tax code assumes that these rates are for separate entities and the tax paid calculations are separate for the water and the espresso. If there was only one 13.5% rate, the line item prices would be combined as €8 before calculating the tax. So it would use a larger total which leads to less rounding.

Clover tax calculation

€4 at 13.5% rate #1 with the base price of €3.52 and €0.48 tax
€4 at 13.5% rate #2 with the base price of €3.52 and €0.48 tax

What the merchant expects
€8 at 13.5% with the base price of €7.05 and €0.95 tax

With two separate tax rates, there has to be more rounding, in this case, one more rounding up by one cent whereas there would be only one rounding with one tax rate.

Clover tax calculation

Order

Item	Tax	Tax Rate	Subtotal
Water	Ireland Tax	13.5%	€4
Espresso	Ireland Tax (copy)	13.5%	€4
Total			€8

Payment table

Amount	Tax
€8.00	€0.96

Payment tax rate table
The system assumes that the tax rates should be calculated separately as they are separate entities.

Taxable Amount	Tax	Tax Rate	Tax Paid
€4.00	Ireland Tax	13.5%	€0.48
€4.00	Ireland Tax (copy)	13.5%	€0.48

Tax report

	Taxable Amount	Tax	Tax Rate	Tax Collected
Payments	€4.00	Ireland Tax	13.5%	€0.48
	€4.00	Ireland Tax (copy)	13.5%	€0.48
Net	€8.00			€0.96

What the merchant expects

Order

Item	Tax	Tax Rate	Subtotal
Water	Ireland Tax	13.5%	€4
Expresso	Ireland Tax	13.5%	€4
Total			€8

Payment table

Amount	Tax Amount
€8.00	€0.95

Payment tax rate table

Taxable Amount	Tax	Tax Rate	Tax Collected
€8.00	Ireland Tax	13.5%	€0.95

Tax report

	Taxable Amount	Tax	Tax Rate	Tax Collected
Payments	€8.00	Ireland Tax	13.5%	€0.95
Net	€8.00			€0.95

Updated 5 months ago

Example 1: One Tax Applied to All Items

Example 2: Two items have different tax rates

Example 3: Two Default Taxes

Example 4: Two Items with Same Tax, One Item has a Special Tax

📘NOTE

Example 5: Items with Zero Tax or Merchants are Tax Exempt

Example 6: VAT (Value Added Tax)

Example 7: VAT, Multiple Rates Per Item

Example 8: Two Different Rate Objects with the Same Rate on the Same Order

Clover tax calculation

What the merchant expects

📘
NOTE