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Use custom rates to manually calculate taxes on invoices or receipts in QuickBooks Online

SOLVEDby QuickBooks284Updated 3 weeks ago

In QuickBooks, you can track sales tax automatically, and then set up a custom tax rate for other types of taxes. For example, use custom rates to manually track special tax rates like meals or excise tax.

If you just switched from manual sales tax, you can also use custom rates to continue tracking sales tax manually.

We’re rolling out the custom rates feature for everyone. Check if you can now switch to the new sales tax system. When you switch, you’ll be able to track sales tax automatically, and use custom rates. If you don’t have the option to switch yet, it should be available to you soon.

Set up custom tax rates

You’re in charge of setting up the correct state or local rate for the type of tax you need to track. Then, you select the tax agency that you send your tax payments to.

Note: If you’re not sure about the correct rates, don’t forget to check your tax authority’s website, or ask your accountant.

Here’s how you can add a single or combined custom rate.

  1. Go to Taxes, then Sales tax (Take me there).
  2. Select Sales tax settings.
  3. In the Custom rates section, select Add rate.
  4. Select Single or Combined.
  5. Enter the Name of the custom rate. If adding a combined rate, enter a Nickname for each rate you need to combine as one custom rate.
  6. Select the Agency you file payments to. If adding a combined rate, select the agency for each rate you need to group as one custom rate.
  7. Enter the Rate, then Save.

Learn when  to add a combined custom rate

Add a combined rate to group individual tax rates that you charge at the same time. This way, you don’t have to select each rate when you add a new sale. You only need to select one combined rate and QuickBooks will calculate the total tax rate automatically. When you look at your report later, each rate is still tracked separately. It’s easy to know how much to pay each tax agency.

Use custom tax rates when you make a sale

After setting up your custom rates, here’s how to use them on your next invoice or sales receipt.

  1. Create an invoice or sales receipt. Then, go back to the steps below before you save your transaction.
  2. In the Select tax rate section, select the Based on location dropdown. 
  3. Select your custom rate from the list. If you need a new custom rate, select + Add rate.
    Note: Keep in mind that you can only use one custom rate on a transaction. If you need to charge multiple tax rates, set up a combined rate first.
  4. Make sure the total tax amount is correct.
  5. Select Save, or Save and send to email your customer their invoice or receipt.

Remove a custom sales tax rate

If you set up a custom sales tax rate by mistake or no longer use it, don't worry we’ll show you how to make it inactive.

  1. Go to Taxes, then Sales tax (Take me there).
  2. Select Sales tax settings.
  3. Locate the rate you wish to remove.
  4. From the action dropdown menu, select Make inactive.

Note: You can’t reactivate a custom sales tax rate. You’ll need to create a new custom sales tax rate with a unique name and a similar percentage.

Review how much tax you owe

As you start using custom rates, it’s helpful to review what you owe from time to time. You can run the Sales Tax Liability report to view your sales tax info anytime. This makes sure everything is accurate before you file your return to your tax agency.

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