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Record an invoice overpayment as a tip in QuickBooks Online

SOLVED•by QuickBooks•400•Updated December 11, 2023

Learn how to turn a customer overpayment or credit into a tip in QuickBooks Online.

When a customer overpays an invoice to give you a tip, you need to record the income. Here’s how.

Note: If you have a QuickBooks Payments subscription, you can turn on tips for your customer invoices.

Step 1: Add an income account to track tips

  1. Go to Settings ⚙ and select Chart of accounts (Take me there).
  2. Select New. Depending on your account view, you’ll either see a panel labeled New account or New category. Select the option you see below for next steps.
  1. In the Save account under ▼ dropdown, select Other Income.
  2. In the Tax form section ▼ dropdown, select Other Miscellaneous Income.
  3. Enter an Account name, like "Tip Revenue".
  4. Select Save.

If you see the New category panel, you’re creating a subaccount under a premade parent account. If you need to create a new account type, switch to accountant view.

  1. In the Category name field, enter a name, like "Tip Revenue".
  2. Select the Select category link.
  3. Choose Other accounts, then Next.
  4. Choose Other income, then Select.
  5. Select Save.

Step 2: Create a tip item

  1. Go to Settings ⚙, then select Products & services (Take me there).
  2. Select New, then Non-inventory.
  3. Enter a Name, like "Tips."
  4. For Income account, select the account you created in Step 1.
  5. Select Save and close.

Step 3: Record the extra money as a tip

  1. Go to Sales, then select Invoices (Take me there).
  2. Select Create invoice.
  3. Enter the Customer. In the Products/Services field, select the tip item you created in Step 2.
  4. Select Save. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
  5. Select the credit and then Save and close.

State laws vary on unclaimed funds. If your customer paid you too much in error, you should contact them and arrange for a refund.

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