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How to use reports to troubleshoot problems with sales tax amounts

SOLVED•by QuickBooks•39•Updated September 22, 2023

There are several reports you can use to ​troubleshoot problems with sales tax amounts in QuickBooks Online.

Note: We recommend consulting an accounting professional to determine the root cause of the problem and how to best correct sales tax issues in your records.

Reports to use to troubleshoot problems with sales tax amounts

To view all sales tax reports:

  1. Go to Reports (Take me there).
  2. Search for the desired report as outlined below.

Look for the following reports:

GST/HST Summary Report (PST Summary, QST Summary, etc.)

This report shows the line-by-line breakdown of your sales tax return, and allows you to click on the amount of each line to view all contributing transactions.

You can use this report to look for delinquent transactions that are affecting your sales tax reporting.

Exception Detail Report

This report shows exceptions that will show up on your next filing. You can use this report to look up the individual transactions and reference their audit history.

Tax Payable Account Quick Report

You can use this report to find discrepancies between your Payable account and the filings in the Sales Tax Centre. To run this report:

  1. Go to Transactions and select Chart of accounts (Take me there).
  2. Scroll to find the Tax Payable account.
  3. Under the Account history dropdown arrow, choose Run report.
  4. Customize the report to the appropriate dates.
  5. Select the Gear icon to show customization options, then select Show More.
  6. Select Tax Amount and Tax Code box.
Note: The Tax Amount column is the amount that will show in the Sales Tax Centre and the Amount column will show in the Payable account.

Troubleshoot Adjustment Transactions

There are several places you can troubleshoot:

Sales Tax adjustment

When you're preparing your return, you can increase or decrease all lines relating to your Tax Payable account.

You'll need to specify an adjustment account to offset the change. If you only want to adjust the filing, you can select the Tax Payable account, resulting in a neutral transaction which will not affect your Chart of Accounts

Zero-adjusted filing

If your Sales Tax Centre shows transactions from previously filed periods, and you want to clear them out, you can perform a Zero-adjusted filing.

To do this, adjust all necessary lines to 0, selecting the Payable account as the adjustment account. When the net amount due on the filing reads zero, you can prepare the return to close out the period, remove all of the transactions, and not affect the chart of accounts.

Reversed tax return

If you need to re-do or undo a tax return in QuickBooks Online, you'll need to work with your Accountant or contact Support.

This will return all transactions from the filed period (will not bring back exceptions) to the Sales Tax Centre, and create a new reversing Journal Entry to counter-act the filing.

Journal entries

There are two ways to represent sales tax on a Journal Entry. You can use either of the following:

  • Direct Debit or Credit to Tax Payable or Suspense Account: When changes to Sales tax accounts are recorded this way, without a sales tax code, the transaction doesn't show in the Sales Tax Centre.
  • Sales Tax Code on a Line Item: When sales tax is recorded this way it doesn't show in the Sales Tax Centre. Usually you should only record the tax code on the income or expense line item.

Frequently Asked Questions

Below are some common questions about troubleshooting sales tax on reports.

Our goal is to help you get into QuickBooks Online and help you track your sales tax as quickly as possible. However, its important to be aware of the following:

  • Not all data conversion processes will format the data so that the Sales Tax Centre can use it. In these cases, we recommend that you only use the Sales Tax Centre for the current period forward. If you do not see all of the transactions from this period, you may have to recreate them, making sure to select an appropriate sales tax code.
  • If you see transactions from previous periods, you can follow instructions above for a Zero-adjusted filing to clear them out.

Transactions that do not have a sales tax code will not show up in the Sales Tax Centre. Review the transactions in question and verify that the correct sales tax code is selected.

Most likely, you have already prepared a return for this tax agency. After your first filing, the “From” date will always be the day after the previous return’s “To” date. You may need to reverse a previous period’s return to resolve this. Please call support to follow this route.

There are several reasons that the return will fall out of sync with the payable account:

  • If you perform a sales tax adjustment with the Payable account selected as the adjustment account, the return amount will change, but the payable account will not.
  • If you perform a Journal Entry as a direct debit or credit to the payable account, the payable account will change, but the return amount will not.
  • The payable account will show filings and reversed filings on the date of creation, which may not match proper chronology.  If this is a concern for your reporting, we recommend using Journal entries to reverse the accounting, and record new Journal entries for the correct date.

These 2 amounts are designed with different goals in mind, and will often be different. It is important to consider the following:

  • Taxable Sales will not show any income that is “out of scope” of tax, or is only taxed by a different agency (ex. PST return will not show QST)
  • Sometimes a product or service has a liability or expense account selected instead of an income account.  Selling this item with sales tax will count as Taxable sales, but not Income.

Here are a few of scenarios where this can happen:

  • A journal entry was issued to move funds between 2 accounts and used the tax code Exempt (Sales), thus inflating Line 101.
  • A bank deposit was issued that debited or credited an income account, without having a Sales tax code selected, so it wasn't reflected in Line 101.
  •  An expense was entered and an Income account was selected as a category.

Taxable sales might be very high because you have sales that have exempt or zero-rated tax codes.  If a sale truly does not belong in the taxable sales total, use the out-of-scope tax code.

This has to do with the way your Tax Payments were recorded.  As a Monthly/Quarterly Filer, you should record your sales tax payments via the “record” link on the far right of the completed return in the View History screen.

 

You now know how to use reports to troubleshoot problems with sales tax amounts.

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