Process refunds

Table of Contents

Refund payments
Reducing client’s credit, explained
Your refund history

When you issue a refund to a client, the money is always returned to the same credit or debit card account the client used to make the initial payment. Read on to find out more about returning funds to clients.

Refund payments

A refund can be issued by a firm owner, admin, or employee given access rights to manage payments . Full and partial payments are subject to the same rules.

When refunding offline payments , consider whether you want to refund or delete them. Refunding is more suitable for actual refunds, and deleting offline payments and adding new ones works better when you want to edit the payment. Also, remember that you can refund only those offline payments that were used for revenue calculations.

Note

Be careful when refunding payments. Refunds can’t be canceled. If you accidentally issue a wrong refund, you’ll have to create a new invoice, and its number will be different.

To refund a payment:

In the client’s profile, go to Invoices > Payments.
Find the payment you’d like to refund and click on its number, or click three dots at the far right and select View.
In the sidebar, click Refund payment.
The full payment amount is shown by default in the Amount to refund field. You can enter a lower amount to issue a partial refund, but it cannot exceed the original payment amount. If the payment included payment technology fees , the refund will also include a proportional share of that fee, based on the amount you enter.

When refunding an offline payment because a larger amount was recorded than actually paid, adjust the Amount to refund field to correct it. For example, if you recorded $1000 instead of $100, enter $900 to fix the payment. Alternatively, you can delete the offline payment if that is more convenient for your records.

5. Specify the reason for the refund.

By default, the client is notified about the refund. If you don’t need to notify the client, clear the Notify client by email checkbox.
Click Refund.
After you issue a refund, the payment sidebar displays the transaction fee alongside the refund amount and, if applicable, the payment technology fee. The Refund history section will show all refunds issued for this payment.

What happens when you issue a refund, depending on the payment type:

Payments made through TaxDome Payments (Stripe)/CPA Charge: The payment is marked as refunded, and you subtract the refunded amount from the client’s credit balance, either fully or partially. The client receives a refund on the credit or debit card or bank account they used for the payment. The payment processor immediately submits a refund to that account. Depending on the bank, it takes 5 to 10 business days to show up in the client’s account.
Offline payments: The payment is marked as refunded, and you subtract the refunded amount from the client’s credit balance, either fully or partially.

For all payments, the associated invoice status does not change after the refund and remains ‘paid’. The payment status doesn’t change either.

Reducing client’s credit, explained

When you issue a refund, what happens with the client’s credit depends on the payment type:

Offline payment without settling an invoice/Pre-payment from the client portal. When you create an offline payment or your client makes a pre-payment via the client portal, it adds credit to the client’s balance. So, if you need to refund such a payment for any reason, you’ll automatically reduce the credit balance by the refund amount. The credit balance can’t go below zero.
- Example: You add a $100 offline payment, which increases the credit balance by $100. When you refund the payment, the credit balance decreases by $100.
The payment amount is less or equal to the amount of invoice(s) it settles. When you create a payment to settle an invoice, you accept payment outside TaxDome or using a payment service provider and record it in TaxDome. So, when you refund it in TaxDome, nothing happens with the credit balance.
- Example: You issue a $100 invoice. Your client pays with cash, and you create a $100 offline payment to settle the invoice. When you refund the payment, the credit balance doesn’t change because it didn’t change during the payment.
The payment amount is more than the amount of invoice(s) it settles. When you create an offline payment to settle an invoice, you can make the payment more than the invoice amount. The rest will be added to the client balance. So, if you refund such a payment, the credit balance will be reduced by the amount added to the credit balance (which means the amount not used for settling the invoice).
- Example: You issue a $100 invoice. Your client pays $150 with cash, and you add $50 to the credit balance. When you fully refund the payment in TaxDome (so the refund amount is $150), the credit balance automatically reduces by $50 because this amount isn’t used to settle the invoice.

Your refund history

Once a refund has been issued, it will be displayed in the Payments tab of the client’s profile.

Click the three dots on the far right of the needed refund and select View. In the sidebar, the payment breakdown appears at the top, and the refund history is displayed at the bottom.