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Frequent Contributor *

Sales Tax - Amount Due does not match Liability

I have just moved from Desktop to Quickbooks Online and would like to use the sales tax feature, but I find that on 2019-03-31, the balance shown as the amount due in "Sales Tax" is completely different from the balance in the GST Payable account (in the trial balance for example).

 

This may be because I never used the sales tax feature in Quickbooks Desktop for 16 years (I was just posting remittances directly to the account, as well as some payments (eg: customs invoices).

 

How do I get the "Sales Tax" feature and the GST Payable account in sync?

Solved
Best answer 04-27-2019

Accepted Solutions
Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

I fixed it by doing a journal entry where the debit and credit were both the same account. One was assigned to HST Line 106 and on the other I left the sales tax field blank.

 

So basically I think the problem is that if you post directly to the tax account, it won't appear on the report unless a sales tax item is referenced in the entry.

 

I didn't want to compare the lists because I have 20,000 transactions in the account and the errors could be throughout it.

 

Thank you both for your help!!

 

 

 

Now I've been trying to post a new question but I keep getting errors. Tried different browsers and everything... but maybe you can help me here...

 

 

 

In Quickbooks desktop, I could easily override the sales tax amount, but in QBO, it forces the base price to change so the sales tax percentage is the same.

 

Situations where I need a custom amount:

Sometimes suppliers calculate tax differently and they are a few cents off.

Sometimes I purchase food for entertainment and then I have to enter half the HST amount as an ITC.

Sometimes the bill contains taxable and non-taxable items and it doesn't specify the subtotal for each.

 

What is the easiest way to deal with these situations?

I'm attaching a file because the post would not submit without a file. (wtf)

11 Comments
Community Backer ***

Re: Sales Tax - Amount Due does not match Liability

Hi, quarfie

The best practice is to use standard workflow such as for sales use Invoice/Sales receipt for expenditures use Bill /Expense/Cheque and so on. This will ensure the accuracy of the reports you generate and makes easy to calculate and enter the tax amounts in QuickBooks Online and will post the necessary journal entries automatically to GST/ HST Payable account, GST/HST Suspense accounts and required returns for the period can be prepared easily from the tax centre.

If you are using the Journal entry screen to enter the transactions especially for tax returns, tax payments/refunds you need to follow specific process/steps to enter the double entries if you need comment back to explain.

Your Q -How do I get the "Sales Tax" feature and the GST Payable account in sync?

Entering the transactions using the standard workflow will solve this issue. OR if you explain what is meant by "Sales Tax" feature e.g. related chart of accounts/return & account balance in the QuickBooks Desktop then I can suggest a solution for that. 

 

Note: QuickBooks will always the post necessary journal entries if you use the  standard workflow

if you are facing a unique situation e.g. Cancelling a filed return etc. then you can use the journal entries.

Comment back for further clarifications/to discuss. 

Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

The balance of the GST payable account at 2019-03-31 is $1707.61

 

But when I go to Taxes>Sales Tax, it shows the amount due for the period is $2165.49.

 

You alluded to journal double entries as a fix. I'm guessing I would debit AND credit the GST Payable account by $457.88 on 2019-03-31 but only assign a sales tax item to the debit? And I suppose any sales tax item other than "Exempt" would work? (ie: the rate doesn't matter because this is only used to assign it to a line on the return)

 

 

Community Backer ***

Re: Sales Tax - Amount Due does not match Liability

Hi,
Possible reasons could be.
Sales Tax centre - Returns period is different compared to GST Payable account e.g.  Return period is 2018-12-01 to 2019-02-28,  GST Payable account as at 2019-03-31
therefore some part of the tax amount in the GST Payable account/some part of the tax amount in the GST Suspense account (return) is excluded and/OR Adjustment posted through the Return screen and reports are with different periods.

The solution is before preparing the return to create a report under the Action column dropdown menu View GST/HST details and a report from the Chart of accounts GST/HST Payable Account and compare both reports to find out the reasons for the difference, check the attached PDF file to check both reports. 

Note: Amount means balance for a selected period which includes Debits and Credits, Balance means Debits and Credits for a selected period plus balance brought forward from the previous period also note this is presented in a different way in View GST/HST details report i.e. Debits and Credits as a separate lines Line 103 GST/HST collected or collectible and Line 106 Input tax credits (ITCs)
* If you find any additional/unusual transactions let me know with the detail to provide a solution.
Feel free to comment back for further clarifications/to discuss.

Community Contributor **

Re: Sales Tax - Amount Due does not match Liability

Hello Quarfie, I had the same type of situation with one of our client files, except the difference between the Sales Tax Owing, and the HST Payable account was around $15,000, so obviously I needed to do some digging. 

It turns out that QBO's Sales Tax functionality is similar to the pre-2008 QB Desktop, in that the two are seemingly not fully connected!

I found that journal entries, even though posted correctly, with the appropriate Tax Code, DO NOT show up in the Sales Tax reports, and aren't included when you file sales tax!

I ended up duplicating the journal entries to bills, and then deleting the journal entries.

Hopefully this helps

Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

When I go to "Sales Tax", under "Next return to file", I see "start date" 2019-01-01, "end date" 2019-03-31, and "amount due" $2165.49 (same as under "balance").

 

So it IS the correct period and the end date DOES match up to the date I'm plugging into the trial balance to confirm the real payable amount, yet it is different (trial balance is $1707.61 on 2019-03-31). Are you telling me this should be impossible?

 

If I click "Prepare return", I see under line 103 "GST/HST collected or collectible" the perfectly correct amount. I know this because I only input 6 invoices per quarter (1 per month per currency).

 

The ITC's is off by about $10 and the rest of the difference ($447.8) is the amount I overpaid last quarter because I hadn't entered all my purchases when I filed, so in theory it should appear in "Adjustments".

 

If I click the "Adjust" button, it seems to indicate that it is going to create a new transaction. Obviously, that's not what I want. The balance is already correct in the account!

 

 

Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

Are you suggesting that if I just create a journal entry to debit the difference to GST payable, then delete that entry, the balance for the return will be updated and the delete does not impact the balance that shows for the tax return?

 

If that's the fix it sounds like there's a major bug.

Community Contributor **

Re: Sales Tax - Amount Due does not match Liability

What I am suggesting is to check if there are journal entries that do not show up on the GST/HST detail report in the Sales Tax Centre, but DO show up if you run a report for the same period from the Chart of Accounts. 

If there are some, they need to be duplicated, but as a bill or expense, with the GST in the correct little box at the bottom, not as a journal entry. For some reason, it seems to make a difference. Then the original journal entry should be deleted, or voided if you prefer.

It just seems that the Sales Tax Centre in QBO doesn't recognize journal entries for whatever reason.  This may not be your situation, but I had to do this today, before filing for a client, and I agree that there seems to be a bug here!

Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

I fixed it by doing a journal entry where the debit and credit were both the same account. One was assigned to HST Line 106 and on the other I left the sales tax field blank.

 

So basically I think the problem is that if you post directly to the tax account, it won't appear on the report unless a sales tax item is referenced in the entry.

 

I didn't want to compare the lists because I have 20,000 transactions in the account and the errors could be throughout it.

 

Thank you both for your help!!

 

 

 

Now I've been trying to post a new question but I keep getting errors. Tried different browsers and everything... but maybe you can help me here...

 

 

 

In Quickbooks desktop, I could easily override the sales tax amount, but in QBO, it forces the base price to change so the sales tax percentage is the same.

 

Situations where I need a custom amount:

Sometimes suppliers calculate tax differently and they are a few cents off.

Sometimes I purchase food for entertainment and then I have to enter half the HST amount as an ITC.

Sometimes the bill contains taxable and non-taxable items and it doesn't specify the subtotal for each.

 

What is the easiest way to deal with these situations?

I'm attaching a file because the post would not submit without a file. (wtf)

Community Contributor **

Re: Sales Tax - Amount Due does not match Liability

The real answer is "It Depends ..." :-)

Make sure your transaction is "tax exclusive", enter the net amount, select your tax code, then go down to the little sales tax box at the bottom and adjust.

At least that works for me.

One of the things I dislike about QBOnline is that you can't enter the transaction total and have it calculate the remainder as you split it out.

Frequent Contributor *

Re: Sales Tax - Amount Due does not match Liability

Hmmm yes that is working now.

 

I swear it wasn't working when I was trying to edit a transaction that I originally brought in through the bank statement, but I may have been mixed up.

 

Thanks again.

Community Backer ***

Re: Sales Tax - Amount Due does not match Liability

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If you are an Accounting professional experiment with the journal entries you will find out nothing wrong with the QB Online simply you need to understand the process to post journal entries to Tax accounts because tax accounts and Returns are unique and special and the way it function/process is different from the QB Desktop.

* When you are entering transactions in QB Online will post HST/GST transactions to HST/GST Payable account and when you are preparing the Returns will post the transactions to HST/GST Payable account and HST/GST Suspense account ( i.e. transfer's the Returns amount to HST/GST Suspense account ) when Payments OR Refunds are made HST/GST Suspense account and Checking /Bank account is used. 

 

Average users in special situations/circumstances need to consult experienced
QB Users/QB customer care e.g. deleting a return.