Is anyone else finding that "based on location" is calculating the incorrect sales tax? The breakdown shows the correct percentage but the calculation by QBs is wrong.

Hello there, @waxchik. 

I'm here to share some information about how QuickBooks Online (QBO) calculates sales tax. Firstly, QBO computes your tax rate for each sale based on the following: 

• Your customer's tax-exempt status.
• Where you sell and ship.
• What you're selling.

It's important to note that not all customers are required to pay sales tax. Tax-exempt organizations such as churches, schools, and other non-profit organizations fall under this category. However, the rules regarding this may vary depending on your location. In some cases, QBO may still need to calculate it for tax-exempt customers. If this happens, you'll need to ensure that your items are mapped to their proper tax categories and that your customer's address is correct for each transaction. QuickBooks will then follow the correct exemption rules based on the items sold and the customer's address.

You can check this article to find out if your customer doesn't need to pay sales tax: Understand and set up sales tax-exemptions in QuickBooks Online.

Furthermore, you don't have to keep track of all the rates you need to charge since QBO does all that based on the location of sale or the "ship to" address you add to an invoice or receipt. Also, please note that some states require sellers to charge tax based on business location even if you ship it to another address in your state. Rest assured that QBO knows the tax rules, wherever you run your business. 

You can also take note of the rules for how a product's tax will change from state to state. You can assign categories to every product you sell so that QBO will know how much tax is needed to be charged for this.

Moreover, you can also use the See the math option to see the detailed breakdown of how QBO computes the amount shown in your invoices. You can also use this feature to edit and select the correct rate.

For reference, you can check this article: Learn how QuickBooks Online calculates sales tax.

Alternatively, I recommend entering a sample invoice using incognito and ensuring that the rates are accurately entered. 

See these keyboard shortcuts to open a private window:

• Google Chrome: Ctrl + Shift + N
• Mozilla Firefox: Ctrl + Shift + P
• Safari: Command + Option + P

You can also try using a supported browser to use QBO to its advantage.

If the issue persists even after opening it in private mode, I suggest contacting our support team. They can help investigate this matter since they have the necessary tools and expertise.

If you want to record or adjust sales tax payments in the tax center, you can refer to this article for guidance: Manage sales tax payments in QuickBooks Online.

Feel free to get back to us if you have further questions about calculating sales tax in QBO, The Community space is always here to assist you.

We are having the same problem with "based on location".  Almost 50% of the time Quickbooks Online does not choose the correct tax rate for a customer's address.  We have to constantly override the tax amount it chooses and put in the correct one that we get from the state Address SalesTax Look Up Directory.  Then every time you edit an Estimate or Invoice, Quickbooks instantly switches it back to the incorrect amount.  So frustrating and time consuming!  Any suggestions?

Thank you for joining the thread, @jthomas222.

I appreciate you taking the time to express your concerns about the incorrect sales tax for your customer's address. Let me provide you with some information that may help you with how QBO calculates sales tax.

To start with, QBO calculates tax rates for each sale based on your customer's tax-exempt status, where you sell, and what you're selling. Also, as my colleague said, not all customers are required to pay sales tax, including tax-exempt organizations like schools, churches, and non-profits. However, tax exemption rules vary by location and QBO may still calculate taxes for tax-exempt customers. To ensure accurate tax calculations, categorize items correctly and verify the customer's address for each transaction. QuickBooks will then follow applicable exemption rules based on the items sold and the customer's address.

For detailed information, refer to this article: Understand and set up sales tax-exemptions in QuickBooks Online.

Moreover, QBO tracks all the rates you charge based on the location of the sale. Please note that some states require the seller to charge tax based on the business location even if the product is shipped to another address in your state.

On the other hand, You can also use the See the Math or Edit Tax option to override or manually adjust the tax amount and see how QBO gives you a detailed breakdown of the sales tax. For reference, check this article: Learn how QuickBooks Online calculates sales tax.

I also suggest reviewing your setup such as address, items, and taxability. However, if you're experiencing the same issues, I suggest contacting our support team. They have the necessary tools to check your account and initiate a screen-sharing session to investigate this issue.

Lastly, I'll add this if you want to record, adjust, and delete sales tax payments in the tax center: Manage sales tax payments.

Feel free to click the Reply button below if you have any other questions about the incorrect sales tax. I'll be here to help you in any way I can.

I am having terrible trouble with sales tax. Even when I don't make it based on location it will not put the exempt or the direct pay in the correct catagory on reports. I have went in and reentered and resaved it and sometimes it will then but this is very time consuming it is exhausing that this is a known issue and has never been addressed. The location when I do use it will not work for me because our locations have no address so we tried just city, we tried county, nothing works. We now never let it be based on location but it still seems to stick the direct pay and exempt sales in taxable column. We have multiple counties in Ohio which I have to pay in the sepecific county we have to manually enter and then pray. Once the bill comes I have to run the report then go in and mannualy re-enter them and assign the right county and tax code (even though it says it is right) so that it goes in the right report so I know what to pay.

This isn't the kind of experience we want you to encounter while working on your sales taxes, Litman Enterprises. We strive to provide a seamless experience when managing your sales transactions and running reports within our platform.

QuickBooks Online applies sales tax exemption rules based on the item tax categories, customer details, and location settings.

To ensure the accurate category reflects when running reports, let's ensure you map all the products and services accurately. For more details, please see these articles:

• Add a sales tax category to products and services
• Mapping your products in an automated tax system

Meanwhile, QuickBooks Online allows you to keep customers from getting charged sales tax on an invoice by setting them as tax-exempt.

I also suggest contacting our QuickBooks Support Team. They're equipped with tools to check the cause. It'll also allow them to submit a ticket to our engineering team to alert them about the issue if necessary.

1. Go to the Help (?) icon at the top.
2. On the Assistant tab, click Talk to a human.
3. Enter your concern in the Type something field, then click the Send icon.
4. Click on I still need a human.
5. Select Get help from a human.
6. You can either select Chat with us or Have us call you.

Additionally, I've added these resources that can help you manage your sales taxes and record tax payments:

• Set up your sales tax in QuickBooks Online
• Manage sales tax payments in QuickBooks Online

Please keep me posted if you require further assistance managing sales tax. My goal is to ensure that you achieve your desired outcomes with bookkeeping. Take care and stay safe!