Learn how to adjust your sales tax due if you use automated sales tax in QuickBooks Online.
With automated sales tax, it’s easy to keep your sales tax records accurate. If you received a tax credit, discount, or fine, you can adjust the sales tax you owe. This way you don’t have to worry about making corrections when it’s time to file.
If you're adjusting the amount to be collected, it’s likely that the agency will still be expecting the original amount. That means you'll either be under-paying or over-paying your sales tax obligations.
There are a few reasons you might make an adjustment:
- Credit / Discount: a credit/discount received from the agency.
- Prepayment: an additional payment for a future return in the current filing period.
- Prior prepayment: a prepayment which was made previously.
- Other: penalties, interest, or rounding errors.
Here’s how to add or delete a sales tax adjustment in QuickBooks Online.
Add a sales tax adjustment
Step 1: Set up an account for sales tax adjustment
It’s important to use the correct account type when adjusting sales tax. Set up an expense account if you need to increase your sales tax due, or an income account if you need to decrease.
Note: To add a new account, switch to Accountant View. If you already have these accounts, move on to creating the adjustment in Step 2.
- Go to Settings ⚙️ and select Chart of accounts (Take me there).
- Select New.
- From the Account Type ▼ dropdown, select Income or Expenses.
- If you need to decrease your sales tax due, set up an income account.
- If you need to increase your sales tax due, set up an expense account.
- Select the account’s Detail Type.
- Use Sales of Product Income for an income account.
- Use Taxes Paid for an expense account.
- Name your adjustment account (for example, sales tax due increase).
- Select Save and Close.
Step 2: Add an adjustment
- Go to Taxes, then select Sales tax (Take me there).
- Enter the date range in the Due Date Start and Due Date End ▼ dropdowns, then select Refresh.
- Find the tax period you need to adjust, then select View return.
- Select Add an adjustment.
- Select the reason for the adjustment from the Reason ▼ dropdown menu.
- Add an adjustment date.
- Select the account for adjusting sales tax from the Account ▼ dropdown menu.
- Choose an expense account if you need to increase the tax due.
- Choose an income account if you need to decrease the tax due.
- Enter the adjustment amount.
- Select Add.
Delete a sales tax adjustment
You can also remove an incorrect sales tax due adjustment. After deleting the adjustment, you’ll no longer see it when you review your sales tax return on the Taxes screen.
- Go to Taxes, then select Sales tax (Take me there).
- Enter the date range in the Due Date Start and Due Date End ▼ dropdowns, then select Refresh.
- Find the tax period you need to adjust, then select View return.
- Find the adjustment and select the adjustment amount.
- Select Delete.
- Select Delete again to confirm.