How to make your Memberships Tax-Exempt On WordPress (2 Simple Methods)
Table of Contents
- What does it mean to Be Tax-Exempt
- What are the reasons you might need to Use Tax Exemptions
- Educational institutions
- Offers tax-free membership fee
- Withholding tax withheld from specific customers
- How to Make Your Memberships tax-exempt (2 Methods)
- Method 1: Turn off all taxes
- Method 2 Turn on Tax Exemptions for Individual Memberships
- Conclusion
You've probably heard the term "tax-exempt" previously, but what does that actually mean?
While you might know the company you work for is entitled to tax exemption, did you know your members can also be exempt? When that happens it is necessary to find a method to withhold taxes on their membership.
- To take advantage of one or more than one of your memberships
- A specific client
In this post, I'll talk about the tax exemption process and how you might need to implement it. After that, I'll discuss how to make a membership tax-exempt with . Let's take a look!
What does it mean to be Tax Exempt
Simplely, tax exemption means tax exemption. Taxes aren't assessed or collected in certain circumstances.
Tax exemptions are handled in different ways depending on the state or country you're based out of, there are some general rules.
As an example, the most common types of institutions which are exempt from taxation in the United States include:
- Charities
- Religion-based institutions
- Educational organizations
- Social welfare programs
But, it is important to note that not all businesses within these broad categories qualify for tax exempt status. The majority of times, qualifying for exemption requires going through an procedure for applying.
In addition, tax exemption is often more complicated than simply being able to ignore tax laws. The exemption may be limited to specific transactions or income, but frequently, it is still required to be documented for tax filing.
If you are not in of the United States, the process and requirements will be different. So, we suggest consulting the official documents of the government to find out more about the rules.
The Reasons You Should Implement Tax Exemptions
Institutions of education
The primary reason that the membership could be tax-exempt is if it applies to a legally-qualified educational establishment.
If a qualified educational establishment wants to incorporate your enrollment into its course in order to teach students, it may be capable of doing so without the need to collect taxes on it.
It's all dependent on the local and federal laws. Still, the organization in question should know its status and have the evidence to prove that it qualifies to be tax exempt.
Offering tax-free membership fees
This configuration could require additional bookkeeping since you'll be in charge of the sales tax.
But, be aware that switching off tax calculations if you are not exempt from tax will place the obligation to track and pay taxes on your shoulders. It's generally easier to enable automated tax calculations, unless you can prove that you have an excuse not to.
Tax withholding from certain customers
If you must withhold tax from certain clients, it is possible to make a copy of their accounts.
So, those who have tax-exempt status can enroll in tax-free membership, while others can opt to use the normal version.
How do you make your memberships Exempt from Tax (2 Methods)
It's good to know that allowing tax exemption in is super simple. You've likely been through this process before, but didn't realize the option.
This video will explain exactly where to find the tax exemption settings in the settings of your WordPress dashboard.
In this article, we'll go over different ways you can make your memberships tax-exempt!
Method 1: Toggle the tax rate for all of them.
If you have a business that is tax exempt or you do not want to add tax charges to every membership, you can change all tax calculations off in your settings.
To do this, hover over the tab on the left side of your WordPress dashboard, and then select the Settings:
After that, click on next, click on the tab for taxes. Then, click on the tab. Here you'll see a checkbox that you can click to allow tax calculation:
The checkbox will enable tax deductions for all of your memberships. If you check the box then you'll be provided with other options to calculate taxes.
If you wish to disable taxes, simply uncheck the box. Make sure to hit the Update Options button whenever you change this setting to make sure it takes effect!
This technique is an effective method to apply blanket modifications in your tax collection setups. But, it is also possible to establish tax rates on an individual basis.
Method 2: Toggle the tax exemption for individual memberships.
To switch taxes on individual memberships, hover over the tab and choose memberships:
Choose a membership that you would like to tax exempt and scroll down to the Registrationtab in the Membership Options. You can simply check the box which reads This Membership is Tax Exempt for turning off tax on it.
Hit the Update button located at the top right hand corner to implement the settings. Also, note that this setting will not be accessible if you've not activated tax calculation.
Check out the previous part of this article in case you need help with this procedure.
Conclusion
It's likely that you do not think too much about tax exemption until you're required to use it for your memberships.
To activate tax exemption for an individual member you must comply with these steps:
- Choose Memberships by clicking the link on your dashboard.
- Pick which membership to edit.
- Go to the registration tab within the Membership Options section.
- Check the box that reads This Membership is Tax Exempt.
- Click on the Update button to save the exemption settings.
Have you got any concerns concerning tax exclusions for ? Please let us know in the comments section below!