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Manage sales tax payments in QuickBooks Online

SOLVED•by QuickBooks•15•Updated January 10, 2024

Learn how to record, adjust and delete sales tax payments in the tax centre.

The tax centre has everything you need to handle tax in QuickBooks. You can run reports for your sales tax liabilities, record or edit sales tax payments, and see your payment for different time periods.

Here's how to manage tax payments and other tasks in the tax centre.

Note:If you don't see the features mentioned below, you may be using the tax feature. Learn more about setting up and using tax.

Review sales tax reports

Get a tax liability report

  1. Go to Reports (Take me there).
  2. Search and select Tax Liability Report in the search field.
    Note: The name of this report may vary based on the location of your QuickBooks Online file.
  1. Go to Taxes and select View reports.
  2. Select VAT liability report.
    Note: The name of this report may vary based on the location of your QuickBooks Online file.

The report shows each sales tax agency, the taxable amount of sales, and payments.

Manage sales tax payments

Record a tax payment

  1. Go to Taxes and select the Payments tab.
  2. Select Record payment.
  3. Fill in the required fields (bank account you're making the payment from, payment date and amount).
  4. When you're ready, select Save. If you want to view the payment, find it in the list and select View.

See all of your tax payments

  1. Go to Taxes and select the Payments tab.
  2. The list of payments is displayed, select View.

Adjust a sales tax payment

You can make an adjustment while filing your taxes.  In the Returns tab, select Prepare return. On the Prepare tax return page select Adjust. Use this when you need to decrease or increase the amount of sales tax payment for things like credits, discounts, fines, interest, penalties, and corrections for rounding errors.

If you need to make an adjustment, go to Taxes, in the Returns tab, select Tax Adjustment. The Journal Entry window opens. Use this when you need to decrease or increase the amount of tax payment for things like credits, discounts, fines, interest, penalties, and corrections for rounding errors.

Enter the adjustment amount and reason for the adjustment. You can enter a positive or negative amount.

Note:Tax can get complicated. If you have questions, reach out to your accountant or tax agency.

Delete a sales tax payment

  1. Go to Taxes and select the Payments tab.
  2. Select Delete from the Action column. Then select Yes to confirm.

Note: You may need to refresh the page in order for this to take effect.

If you see the messages "We're sorry, we can't delete filed tax right now. Please try again later." or "We're sorry, we can't deactivate the tax you selected. Please try again later. Contact support if waiting and trying again doesn't resolve the issue" while deleting a transaction, don't worry.

If the transaction is matched to a bank transaction

  1. Go to Transactions, then select Bank transactions (Take me there).
  2. Select the bank account you used to pay for the tax payment.
  3. Select the Categorised tab.
  4. Find the transaction you want to delete. It should be matched to another transaction.
  5. Select Undo to unmatch the transactions.
  6. Go back to the Taxes menu and delete the transaction.

If you were using the earlier tax system and not the tax centre

If you see "This tax was recorded in the old tax system. Write a cheque to record a payment for this tax. Payments recorded via Write Cheque will not appear in the recent tax payments table below" don't worry. You'll need to edit each transaction that's part of the original tax payable amount.

  1. Find and open each transaction.
  2. Remove the current tax line item
  3. Use the tax items at the bottom of the invoice.
  4. When you're done, select Save.

Once transactions are re-associated, create a journal entry to move the liability from the new current tax liability account to the original tax liability account.

Note:
  • If you've been using QuickBooks Online and paying tax using the earlier method, you may need to record tax payments using the earlier method and the tax centre for a time.
  • If you have outstanding transactions using the earlier tax method, record tax payments the same way you did in the past.  Record new tax payments in the tax centre that charges the new rates you set up.

Learn more about how cash and accrual accounting affect sales tax.

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