You can apply tax to an invoice in the form of a percentage based or fixed dollar amount.
OVERVIEW
Tax can be applied to different sections of the invoice. For example, you could apply tax to:
The sub-total of the entire invoice.
Only time entries, but not expenses.
Only expenses, but not time entries.
Here is how you can add tax to an invoice...
Open the Invoice Editor (for new invoices or existing invoices).
Scroll down on the page to view the Discounts & Additions block (pictured below).
Click on Add Discount / Addition.
Let's take a look at the different options you have when adding tax to an invoice...
Item - Choose Tax from the Item dropdown menu.
Applied To - The Applied To dropdown menu will let you choose Time Entries, Expenses, or Sub-Total. This is how you can determine which portions of the invoice to apply tax to. Maybe you'd like to tax time entries but not expenses - simply choose Time Entries for this column. To tax expenses but not time entries, choose Expenses. To tax the entire invoice, choose the Sub-Total option.
Type - The Type dropdown menu will let you designate the tax line item as a Percentage or Dollar Amount. The Percentage option is for situations like "I'd like to apply an 8% tax to time entries". The Dollar Amount option is for situations like "I'd like to apply a fixed rate tax amount of $250 to the invoice".
Notes - Enter any notes for the tax line item as you'd like it to appear on the invoice itself. This is useful for describing the nature of the tax (for example, you could write something like "8% tax on reimbursable expenses".
Basis - The basis column is used when you are setting up Percentage based tax. Basis designates the amount that the tax percentage will be applied to. For example, if you choose to apply a tax percentage to the entire invoice, the basis column would be populated with the invoice sub-total. The tax amount would be calculated based of the basis and designated percentage. You can edit the Basis column whenever you'd like.
Percentage - If you are adding tax as a Percentage line item, specify the percentage you'd like to add.
Amount - This column shows you the final tax dollar amount for the line item. If you are applying a Percentage tax type, the Amount column is not editable (it is calculated from the Basis and Percentage column). If you are adding Dollar Amount tax, the Amount column is where you can designate the dollar amount you'd like to apply.