Fixing sales tax payment from last year (paid with credit card)

You're right that when paying sales tax from the Pay Sales Tax window, only bank accounts appear in the dropdown, Alex. Let me explain how you can apply the sales tax payment.

To record the sales tax payment using your credit card, you'll need to create a new transaction to apply that payment to the Sales Tax Payable account. However, since you prefer not to create a new transaction and your account was reconciled months ago, I recommend contacting your accountant. They can provide insights to ensure your records are accurate.

To review your sales tax payable and confirm everything is correct before making payments, you can run reports. For more details, please check out this article: Review sales tax reports.

If you need assistance with customizing sales tax reports, please let us know. We’re always here to help!

@alex_nj  A good first step would be to share how you handled this transaction in the first place.

Is the credit card account in question present in QB, or did the credit card belong only to the owner or one of the officers?

Either way, depending on your answers, this may be one of the rare situations where a GJE could be appropriate.

This is a credit card account I reconcile regularly, and when I made the payment to the state I booked it as an expense. Because of the checking account's being compromised and all the headaches around that, the sales tax remittance was late. So I just made the payment in order to avoid penalties and (probably) figured I'd fix it later. Then, of course, I forgot about it.

I had thought "Adjust Sales Tax" would be the function used for this but that wouldn't let me apply the payment to Sales Tax Payable either. So I'm kinda stuck. A GJE would be fine if we can figure out what it should look like.

Thanks!

To record the sales tax payment using your credit card, you'll need to create a new transaction to apply that payment to the Sales Tax Payable account.

Can you explain what kind of transaction would need to be created to apply the payment? I'd prefer not to create a dummy bank account just for this (which is one solution I've seen mentioned elsewhere). But I can't just apply the payment to Sales Tax Payable directly, unfortunately. Is ther another simple fix?

SORRY, I meant to send this comment to @MirriamM.

@alex_nj  At this point, I'd probably handle it by the following method:

First, go back to the credit card transaction in question and change the expense account you booked it as to a bank account; doesn't really matter which one unless you have a personal preference.

Second, use the bank account in question to mark the Sales Tax paid via the Pay Sales Tax window for the amount of the original credit card charge. You could date it for the end of the year, but it doesn't really matter as long as it is within the year in question. Probably want to put an explanation in both the credit card transaction and this Liability Check.

By doing this, you cause a few things to happen.

One, the Sales Tax Liability is properly reduced.

Two, the reconciled effect on your credit card balance remains preserved and as such, the past reconciliations remain intact.

Three, you now have a pair of off-setting transactions associated with the bank account that also do not affect past reconciliations, nor your year-end balance for the bank account in question.

When you go to reconcile the bank account next, mark both transactions and they will net to a $0.00 effect on your reconciliation and be removed from the list of transactions to reconcile.

I think this would be best. As alluded to earlier, while it would be better if it weren't the case, QB and GJEs don't have a great relationship. QB basically treats them as the 'Final Option', and they don't always show up in reports the way you would like them to.

This way, at least, resolves the issue without creating any new accounts or disturbing your past reconciliations.

@alex_nj  Forgot to add; what I said above does depend a bit on exactly what expense you chose and whether the income taxes for the prior year have already been filed.

If it was an inconsequential expense account or otherwise was adjusted for on the income taxes, then it's all good.

If it was not an inconsequential expense account, then it'll get a bit murkier.

@alex_nj 

Wouldn't it be easiest to make a Sales Tax Adjustment and assign the adjustment to the same expense account that was used for the cc payment?  IMO, if you go back and change the original cc payment for the tax from an expense account to an asset account, you'll change Retained Earnings.  

Go to Vendors > Sales Tax >  Adjust Sales Tax Due.  Use a date in 2025, select the appropriate sales tax vendor, select the same expense account you used for last year's cc payment of the tax, select 'Reduce sales Tax By' and enter the amount.  If you have multiple sales tax vendors (state and city), you'll need to make multiple adjustments for the amount applicable to each.  

@Rainflurry @FishingForAnswers 

Thank you both for your suggestions! I will chat with our accountant to see if she even noticed this issue and was going to adjust for it. If she hasn't, I will try one of these and hopefully it will get it resolved. 

Appreciate your help!