How to record prepayment of sales tax using the new automated sales tax feature?

[FabianaT]

We recently received a letter from CDTFA that we are now required to file 2 prepayments prior to our quarterly sales tax return.  The new automated feature does not allow me to make prepayments, it assumes that I am filing a return.  Where do I post this prepayment on my balance sheet? Should I simply post to the sales tax liability associated with QBO automated sales tax feature?  Will the system recognized that a prepayment has been made? Any help will be appreciated.

QBO support, if you are reading this post, please make an upgrade to have an option to make prepayments directly from the sales tax tab.

Thank you!

[Kristine Mae]

I can show you how to post the prepayment, FabianaT.

You'll have to create an adjustment.

Here's how:

1. Click Taxes, then choose Sales Tax.
2. Click View return.
3. Click + Add an adjustment.
4. Under Reason, choose Pre payments.
5. Choose an account, then enter the amount.
6. Click Add, then click Select filing method.
7. Choose the filing method.
8. Choose the Payment date and Bank account, then click Record payment.

I've attached a screenshot for your reference.

Let us know if you need more help. Have a good one! 

[FabianaT]

This would work but I cannot "View Return" because is greyed, out "Accruing"...Since I file Quarterly, it will not let me file return until April and I need to make pre payments for Jan and Feb. 

[Joyce_P]

We can click the View return button when it's time to file the quarterly taxes, FabianaT.

Let's wait for the quarterly tax filing for us to be able to click the View return button and enter an adjustment for the prepayments. To do it, please refer to the steps which my colleague @Kristine Mae provided.

You can get back to me if you need more help. Have a good one!

[FabianaT]

Joyce,

This is not a feasible solution. The funds will clear my account on the date of payment...so the entry must be in QBO for purposes of cash flow and bank reconciliation. Your suggestion is that we wait until April to record payments made in Feb and March? 

Any other suggestions? 

Thank you, 

[Kristine Mae]

Hey there again, FabianaT.

You can create a journal entry to record the prepayment. Though, this will not affect the sales tax center. It will only affect your bank.

Here's how:

1. Click the Plus sign (+) icon.
2. Choose Journal Entry.
3. Fill in the necessary fields.
4. Click Save and close.

As always, I suggest conferring with your accountant for the categorization of accounts.

We're here if you have other concerns. Have a good day! 

[Vaslau]

Is Quickbooks updating software to address this issue. Sales Tax PrePayments are the standard in California and we need a way to post these payments real time and have them reflected on our returns.

[Kristine Mae]

Hello there, Vaslau.

For now, that's the only way for us to record a sales tax pre-payment using the new automated sales tax feature. 

I will forward this concern to our management so they can pass this to our engineering team. They will review this and might add it to the future update.

In case you have other concerns, feel free to let us know. 

[Jevans]

Do you need to change filing to Monthly in order to make a monthly pre-payment.  "Filing" is technically done on a quarterly basis, and therefore the view return button won't show up until after the end of the Quarter.   I'll test and see if this works.

thank you for the idea, spent hours on the phone with QBO...

[Jevans]

I tried changing my Sales Tax Setting to "Monthly" It will let me click on view, so I can record the payment into my checking account.   Haven't moved forward with this yet, as I will need to delete / Void previous entries I made to my checking account to keep it in balance.  Want to think about this a bit more first.

[MaryLandT]

Hello there, @Jevans,

We stay compliant with the sate and the IRS's regulations when it comes to filing frequency and paying sales taxes.

You can change the filing frequency, however, you're unable to file it in the system since you're required to file quarterly.

I suggest pulling up the Sales Tax Liability report, then filter the date range by quarter. This is to view your return for the specific quarter and pay directly to the IRS.

Here's how:

1. Select Taxes from the left menu, then select Sales Tax.
2. Click Reports, then select Tax liability report.
3. On the Report period section, select the desired quarter.

To delete previous entries to your checking account, please follow the steps listed below:

1. Select Accounting from the left menu,then choose Chart of Accounts.
2. Look for the checking account, then click View register.
3. Locate the transaction and click it.
4. Select Delete and confirm the process.
5. You can then record the prepayment.

To learn more about sales tax prepayment, feel free to read through this article: Prepaying US Sales Tax.

I've also added this article for your guidance on how record, adjust, and delete sales tax payments: Manage sales tax payments.

Should you need anything else with your sales tax, please let me know. I'd be glad to help you out.

[BookHappy]

So this issue still hasn't been fixed in over a year? 

Sales Tax Prepayments still can not be entered for Quarterly filers in the Sales Tax module.  It seem unreasonable to expect people to wait months to enter the Prepayments or enter a Journal Entry that would then need to be removed and re-entered in the Sales Tax Module.  Prepayments are standard in California and we need a way to post these payments in real time and have them reflected without duplicating work. 

Please bump this up the priority list for QBO to resolve ASAP.

[SarahannC]

Hello BookHappy,

As of now, there's no specific time as to when recording prepayment of sales tax will be ready. In the meantime, you can use a clearing account as a workaround where you can transfer the sales tax payment you made. This helps you move money from one account to another account. Here's how:

1. Go to Accounting on the left panel.
2. Within the Chart of Accounts tab, click the New tab.
3. Choose Bank for the Account Type. You may choose any detail type you want for your clearing account.
4. Type in the Name for the clearing account.
5. Do not enter any amount in the balance before clicking Save and Close.

Once the filing is ready, you can then record payment to the sales tax using the clearing account. Also, you can visit our QuickBooks Blog website to know our latest features and product enhancement from time to time.

Comment below if there's anything else you need. Stays safe always.

[tisaocean]

i have tried to record a prepayment as noted in this thread, but it increases my sales tax due, not decrease. 

i have made 2 prepayments. one of them shows up and one does not. please help!

[BettyJaneB]

Thanks for joining us here in the Community, @tisaocean.

I got your back in managing the sales prepayment that you've entered in QuickBooks Online.

You'll need to check the set up of the other payment that was not showing up. This way, you can make necessary corrections so it would be posted correctly.

If you can't find the transaction, you can search it from the Audit Log. From there, you can modify the transaction.

To do that:

1. Go to Gear icon.
2. Click on Audit Log.
3. Select Filter.
4. Use the fields on the Filter panel to choose the appropriate User, Date, or Events filter to narrow the results.
5. Select Apply.

Once done, you can create a sales tax adjustment to decrease your sales tax amount due. 

To do that:

1. Click the Taxes menu from the left menu.
2. Select the agency you're recording the payment.
3. Click Record Tax Payment.
4. Fill all the necessary information.
5. Mark the Make Adjustment box, then enter information about the adjustment.
6. Select Record Tax Payment.

Here's a great resource that you can check on for more detailed steps: Manage Sales Tax Payment.

If you're using the Automated Sales Tax feature, here's how to make Sales tax adjustment:

1. Click the Taxes menu from the left menu.
2. Select the agency you're paying.
3. Click View return.
4. Click the + Add an adjustment link.
5. Enter the reason for the adjustment, the account and the amount.
6. Once done, select Record payment.

You can check out this article for more detailed steps: Set up and use Automated Sales Tax.

You're always welcome to visit the Community again if you have any other questions with taxes. I'd be more than happy to help. Have a good one!

[lienpeter]

I was able to change the filing frequency to monthly to record the prepayment and then change it back to quarterly.  This does not appear to have any impact on prior reports, etc.

[624]

This is how I handled it, not sure if the report will be correct.

go to Sales Tax Center -

Change the due date start to July (the beginning of the Quarter) and the due date end to September.  Then California will be accessible.  Click on view return, then select "Make Payment".

[624]

The dates seem to be key.  Use July as the "Due Date Start" and Sep as the "Due Date End".  You should then be able to access California report.  Once there, I selected "Make Payment" and entered the prepayment.  The liability account looks correct.  I am hopeful the report will reflect accurately.

[Kstar137]

I am ASTOUNDED that Quickbooks has not resolved this yet. How can you consider yourself a professional accounting program without this capacity? I think I'm going to need to change software and find something else. I echo Bookhappy above:

So this issue still hasn't been fixed in over a year? 

Sales Tax Prepayments still can not be entered for Quarterly filers in the Sales Tax module.  It seem unreasonable to expect people to wait months to enter the Prepayments or enter a Journal Entry that would then need to be removed and re-entered in the Sales Tax Module.  Prepayments are standard in California and we need a way to post these payments in real time and have them reflected without duplicating work. 

Please bump this up the priority list for QBO to resolve ASAP.

[pamelakeffer]

And it is now Feb 2023 -  QBO has not resolved this issue!

[Kstar137]

We thought they had not fixed this. They still probably haven't, but for some unexplained reason the journal entry we posted this month to indicate sales tax prepayment for January actually worked and showed up as a payment in the Sales Tax Module. No idea why it worked now and not before. 

Try a journal entry crediting your bank account and debiting the Sales Tax Payable account.

[Kurt_M]

I appreciate you for joining the thread. I'll gladly share a possible reason as to why you can't get around this and enter Sales Tax Prepayments inside your QuickBooks Online (QBO).

You can't enter the prepayment in QBO because the program uses the schedule you entered in your sales tax setting. A workaround for this is to add an adjustment. I can input the steps below to get you started. Here's how:

1. Access your QuickBooks Online company.
2. On the left navigational bar, go to the Taxes tab.
3. Locate your accumulated taxes.
4. In the Action column, click View Tax Return.
5. Below Total tax section, click the +Add an adjustment hyperlink.
6. In the Reason, you'll want to select Prior prepayments.
7. Enter the Adjustment date, and then choose the appropriate account.
8. Enter the prior prepayments amount in the Amount section.
9. Once done, click Add button below.

I'd also recommend reaching out to your accountant if you're unsure of the steps that I've mentioned. This way, they can provide you other ways to enter your prepayments.

Feel free to visit this article for more information about the process: Create or delete a sales tax adjustment in QuickBooks Online.

Additionally, see this page to learn more about adding details to your reports in QBO: Customize reports in QuickBooks Online.

Thanks for dropping by today. In case you have any additional QuickBooks-related concerns, feel free to post here again. Take care, and have a nice day!

[bclark21]

I have the same issue. Read my post here: https://quickbooks.intuit.com/learn-support/en-us/taxes/how-to-record-estimated-pre-paid-sales-tax-i...

I submitted feedback and so should you. Here was mine:

The state of CA is requiring us to make monthly "estimated" sales tax payments, but our filing requirements continue to be quarterly.

QBO with auto taxes turned on does not allow for proper recording of sales tax prepayments. The suggested work-around to record such a payment is to add an adjustment. However, when adding a "pre-payment" adjustment, the only accounts types allowed are expenses. For some reason, this actually increases the tax liability. When adding a "prior pre-payment adjustment" one is able to choose between an expense account and an income account. You are able to then record the payment as "income" and then from the bank feed, categorize your payment to the same income account to zero it back out.

Ideally, one should be able to add a sales tax payment on an open period. Somewhat less ideally, one should at least be allowed to choose a bank account from the "pre-payment adjustment" which should result in a decreased liability on the sales tax account and a "sales tax adjustment" transaction which can be matched from the bank account.

Attention QuickBooks! This is not an isolated problem. Here is a list of some others with the same issue:

1. https://quickbooks.intuit.com/learn-support/en-us/taxes/can-someone-help-with-california-sales-tax-p... 

2. https://quickbooks.intuit.com/learn-support/en-us/taxes/applying-sales-tax-prepayments/00/1051455

3. https://quickbooks.intuit.com/learn-support/en-us/taxes/sales-tax-prepayments/00/1082439

4. https://quickbooks.intuit.com/learn-support/en-us/taxes/sales-tax-prepayments/00/1269319

5. https://quickbooks.intuit.com/learn-support/en-us/taxes/as-of-2022-we-are-scheduled-thru-the-state-t...

6. https://quickbooks.intuit.com/learn-support/en-us/taxes/sales-tax-record-payment/00/880413

7. https://quickbooks.intuit.com/learn-support/en-us/taxes/how-to-record-prepayment-of-sales-tax-using-...

[LSGMB]

Please Quick Books, we need a solution to this problem.

[LeizylM]

I can share what I know about the features and options you can use in QuickBooks Online (QBO), LSGMB. 

As of now, the ability to record the Sales Tax payment into the Automated Sales Tax feature is unavailable in QBO. As a workaround, we can create an adjustment. You can follow the steps provided by my colleague KurtKyle_M on how to do it. 

I can see how the functionality would be beneficial to your business. I'd recommend sending a feature request directly to our Product Development team. This helps us improve your experience and the features of the program.   

Here's how:

1. Go to the Gear menu and then select Feedback.
2. Type in your feature request in the description box.
3. Once done, click on Next.
   

I've also added this article to learn more about how to record, adjust, and delete sales tax payments: Manage sales tax payments.

Reach out to me if you have additional questions about recording pre-payments in QBO. I'll be more than willing to help. Have a great day!