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Switch to automated sales tax in QuickBooks Online

SOLVEDby QuickBooksQuickBooks Online160Updated 1 day ago

Learn how to switch from manual to automated sales tax in a few quick steps.

QuickBooks is simplifying how you track your sales tax returns. With automated sales tax, QuickBooks automatically calculates sales tax based on what you sell, where you sell, and where you ship. If your state changes something, like the sales tax rate, QuickBooks automatically updates your tax rates for you.

Here's how to switch to the new sales tax system in QuickBooks Online and how to view your existing sales tax info after you’ve switched.

Note: We're rolling out automated sales tax for all QuickBooks users. If you don't see the option to switch, it should be available to you soon. Once you've switched to automated sales tax, you can't change back to the old experience. If you want to understand more before switching, learn how QuickBooks calculates sales tax.

Learn what happens when you switch to automated sales tax

When you switch to automated sales tax, you’ll be asked to match your existing tax rates to the official tax agency listed in QuickBooks. If you have less than 20 tax rates, you must match all your rates.

If you have more than 20 rates, it’s strongly recommended but not required to match all your rates. Any rates you don’t map will be unavailable to use on future sales forms. While you can still access historic data for your rates from the sales tax liability report and chart of account registers, you won’t see transactions that use the unmatched rates in your Sales tax tab.

Make the switch to automated sales tax

When you're ready, here's how to switch to automated sales tax and match your tax rates.

  1. Go to Taxes, then select Sales tax (Take me there).
  2. If your QuickBooks is ready to switch to automated sales tax, select either Use automatic sales tax or Get Started.
    Note: If you don't have the option to switch, it should be available to you soon.
  3. Check if your business address is correct. If it is, select Next. If it isn’t, select the pencil icon ✎ to update the address, then select Next.
  4. Match your existing tax rates with the official state agency in one of two ways: 
    • Match one rate at a time: If you only have a few rates, use the OFFICIAL AGENCY NAME ▼ dropdown to search for and select the correct tax agency for each rate. Make sure it matches with the tax agency under the YOUR AGENCY NAME column.
    • Match multiple rates at once: To match multiple rates to a single agency, select the checkbox for each tax rate you want to bulk match and, in the Bulk Matching window, use the Official agency ▼ dropdown to search for and select the correct tax agency. Then select Apply ([#] selected).
  5. Select Next.  
  6. Review the rates and when you're done, select Save.
  7. Select the X to close the window, or to view a demo of automated sales tax, select Continue.

To learn what you need to do next, check out our automated sales tax overview. We'll walk you through what you need to know after switching to automated sales tax.

Check your past returns

When you switch to the new sales tax, you don't lose any of your existing sales tax info. You can manage all your paid sales tax returns in one place.

  1. Go to Taxes, then select Sales tax (Take me there).
  2. Select History.
  3. If you want to view more details, select View return.

If you didn’t match all your rates when you switched to automated sales tax, you can view your data from the sales tax liability report or chart of account registers.

Reconcile past sales tax for unmatched rates

When you switched to automated sales tax, if you didn’t map all your rates and you want to reconcile past sales tax information, you have two options:

  • Talk to your accountant about using a journal entry to move old/new liability accounts. The agency name will be the same name listed in the sales tax settings.
  • Talk to your accountant about using a journal entry to zero out liability and start fresh in the Sales tax center.

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