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Level 2

Are convenience fees taxable?

 
Solved
Best answer November 12, 2019

Best Answers
Highlighted
Level 15

Are convenience fees taxable?

if the customer is paying the fee, yes it is taxable income

View solution in original post

Highlighted
QuickBooks Team

Are convenience fees taxable?

Hi greg29,

 

You'll have to create an income account and a service item for your convenience fee. Then, add it as a new line item to your transaction to make it taxable. Let me walk you through how.

  1. Click Accounting, then Chart of Accounts.
  2. Click New. Then, choose "Income" under Account Type.
  3. Choose "Service/Fee Income" under Detail Type. Then, enter a Name.
  4. Click Save and Close.

After that, create a service item following these steps.

  1. Click Gear. Click Products and Services.
  2. Click New, then click Service.
  3. Enter the product/service information and choose the Income Account you created.
  4. Click Save and close.

Once done, add the service item as a new line item to your transaction.

  1. In your invoice, click the convenience fee item.
  2. Enter the Amount, and make sure to mark the Tax column.
  3. Click Save and close.

I've attached some screenshots for you.

 

You can read these articles for more information about:

For your future reference about adding and matching downloaded transactions, please check this article: Assign, categorize, edit, and add your downloaded banking transactions.

 

The Community is always here if you have other concerns. Please don't hesitate to reach out.

 

 

 

View solution in original post

8 Comments
Highlighted
Level 15

Are convenience fees taxable?

if the customer is paying the fee, yes it is taxable income

View solution in original post

Highlighted
Level 2

Are convenience fees taxable?

Does quickbooks tag that as taxable income? My bookkeeper says there’s a bug in qbo that isn’t applying tax to it.  

Highlighted
QuickBooks Team

Are convenience fees taxable?

Hi greg29,

 

You'll have to create an income account and a service item for your convenience fee. Then, add it as a new line item to your transaction to make it taxable. Let me walk you through how.

  1. Click Accounting, then Chart of Accounts.
  2. Click New. Then, choose "Income" under Account Type.
  3. Choose "Service/Fee Income" under Detail Type. Then, enter a Name.
  4. Click Save and Close.

After that, create a service item following these steps.

  1. Click Gear. Click Products and Services.
  2. Click New, then click Service.
  3. Enter the product/service information and choose the Income Account you created.
  4. Click Save and close.

Once done, add the service item as a new line item to your transaction.

  1. In your invoice, click the convenience fee item.
  2. Enter the Amount, and make sure to mark the Tax column.
  3. Click Save and close.

I've attached some screenshots for you.

 

You can read these articles for more information about:

For your future reference about adding and matching downloaded transactions, please check this article: Assign, categorize, edit, and add your downloaded banking transactions.

 

The Community is always here if you have other concerns. Please don't hesitate to reach out.

 

 

 

View solution in original post

Highlighted
Level 2

Are convenience fees taxable?

Wow.  Will try now!

Highlighted
Level 2

Are convenience fees taxable?

We've tried all this and we think QBO isn't correctly applying taxable income to it - when it is set to do that.  Causing me to fund $6 a month for the taxable fees.

 

It looks like even though the convenience fee income is marked as taxable in QuickBooks, it’s still not charging sales tax-Please see the attached transaction report. Please let me know what we should do. Thanks again for all your help with this :) 

 

The QB convenience fees that have recently been added should be a sales taxable item, however even though they are marked to be this way, they are not pulling over as taxable.

 

is also not charging additional sales tax to the client.

 

We do not have another solution other than this is likely a result of a technical issue.

Highlighted
QuickBooks Team

Are convenience fees taxable?

Thanks for getting back to us and providing us detailed information of your concern, @greg29.

 

I also appreciate you for going through to the steps provided by my colleague above. Let's make sure to enter an amount for the convenience fee. This way, it'll generate the sales tax total. I've attached some screenshot for visual reference. 1.png 2.png

I've also got you this helpful article for reference in case you want to learn more about sales tax in QuickBooks Online (QBO): Sales Tax in QuickBooks Online.

 

As always, you can visit our Income and expenses page in case you want to learn some tips and tricks on managing your income.

 

As always, keep me posted if you have other concerns. We're always here to help.

Highlighted
Level 2

Are convenience fees taxable?

yes - we have it marked as taxable income but Quickbooks isn't putting it in our taxable income field

perhaps a glitch in the programming?

 

Highlighted
QuickBooks Team

Are convenience fees taxable?

Hello, @greg29.

 

Let me route you to the best available support to ensure that your sales tax are calculated accurately.

 

Since the Community page is a public forum, I'd recommend contacting our Customer Care Team. An agent will be able to look up your account on a secured environment. They'll also be able to check on the root cause why your sales tax is not calculating accurately.

 

Here's how to contact us:

  1. Go to Help (?).
  2. Click the Contact Us button.
  3. Type a keyword about your concern on the What can we help you with? field.
  4. Click Let's talk.
  5. Select a connect with us.

Keep me posted if you have other questions. I'm always here to help.

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Contact us