Welcome to the Community forum, Barbara. Thanks for reaching out to us. I'm here to assist you with your sales tax concern.
QuickBooks Online (QBO) is designed to automatically calculate sales tax to ensure compliance with tax regulations. The correct tax rate for each sale is determined by the following factors:
- Your customer's tax-exempt status
- Where the sale occurs and where goods are shipped
- The type of goods or services being sold
When sales tax is overridden on an invoice, it can result in discrepancies on the Sales Tax Liability Report. This happens because overrides change what is reported to each tax agency.
To investigate the issue, I recommend verifying the customer's shipping address in their profile, as city taxes are often applied based on the shipping location.
Here's how you can check:
- In the left-hand menu, go to All Apps, then select Customers Hub and Customers.
- Find and select the customer, then click the Edit button in the upper-right corner.
- Scroll to the Addresses section and review the shipping address.
If the shipping address is incorrect, update it and click Save. Please note that this change will not affect existing transactions; it applies only to future invoices. To apply the corrected tax calculation, you’ll need to delete and recreate the invoice.
If the shipping address is correct, the customer may be taxable for the city based on their location.
For more information on how QuickBooks calculates sales tax, I recommend reviewing this article: Learn how QuickBooks automatically calculates sales tax. It provides a detailed explanation of the process and helpful tips for managing tax settings in your account.
Additionally, you can consult your accountant or visit your state’s sales tax website for more guidance.
Feel free to reach out if you have any other questions or concerns about sales taxes in QuickBooks. The Community is always here to support you.
