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Level 3

Automatic tax setting - different rates on item sold and shipping

Hello QB community!

 

Sorry for a long post.  

 

Our company sells products in a state where the sales tax rate for the product category is 10.25%.  The state also taxes on shipping (6% sales tax).  

 

When I create an invoice, it seems like I can only do two things for tax calculation, which neither of them is what I want.  

 

Option 1: select "based on location" and same tax rate is applied on both the product and shipping. 

 

image.png

 

 

 

 

 

 

 

Option 2: select appropriate tax rate category on the product, then shipping cannot be taxed.  "Tax on shipping" does not show up.

 

image.png

 

 

 

 

 

 

 

My first question is what do I need to do to apply appropriate tax on the product and shipping at the same time? 

 

Now, up until yesterday, whenever I created invoices in QBO, it automatically calculated correct tax on products and shipping as below.  Even though "Based on location" was selected, tax on subtotal was 10.25% (59 x .1025 = 6.05) and tax on shipping was 6%.    

image.png

 

 

 

 

 

 

 

My second question is, if I can go back to the way QBO handles invoice like until yesterday, that would be great. Would anybody know how?  I did not change any setting in QBO between yesterday and today.  

 

Appreciate your time to read this post till the end!

3 Comments
QuickBooks Team

Automatic tax setting - different rates on item sold and shipping

I appreciate the detailed information about your concern, MKT22191.

 

When you create a sales receipts or invoices, QuickBooks Online calculates the sales tax based on the following criteria.

 

  • Your customer’s tax-exempt status
  • Where you sell and where you ship
  • Your service or product’s tax category

Also, the Location of sale and Shipping to information should be correct since it affects how QuickBooks computes the tax rate. If you're able to meet these requirements, let’s perform the browser troubleshooting to fix the issue.


To begin, log in to your company via the incognito mode or InPrivate window. This prevents the browser from saving your browsing data.


Here’s how to bring up one:

 

  •  Press the Ctrl + Shift + N (Google Chrome)
  •  Press the Ctrl + Shift + P (Firefox or Internet Explorer)
  •  For Safari, hold down Command + Shift + N.

From there, create an invoice to check if it calculates the correct sales tax on your products and shipping. If it works, clear the cache of your regular browser. Web-based platforms like QBO collects cache files to save time when loading data. They can often become outdated and cause unexpected behavior in the program. Clearing the data improves the overall performance of the browser.

 

For additional resources, these links cover all the information about the Sales Tax feature and how QBO tracks the rate when you make a sale.

 

Stay in touch if you have any clarifications or concerns about taxes. I’ll be right here to answer them for you. Have a good one.

Level 3

Automatic tax setting - different rates on item sold and shipping

Thank you @Rasa-LilaM for reply.

 

I tried incognito mode.  It did not solve the mystery, but automatically gave me a new tax rate of 9% on the product as below.  

image.png

 

 

 

 

 

 

 

I clicked "see the math" and checked the explanation.  It appears that QBO thinks 9% should be the right tax rate for the product category...

 

Also, if I chose the tax category instead of "based on location," I cannot tax the shipping, which is the same outcome as the second picture of my post yesterday. 

 

I could override the tax rate, but I would like to avoid the extra overriding step if possible. (takes more time!) 

 

Thoughts?  

 

Thank you!

QuickBooks Team

Automatic tax setting - different rates on item sold and shipping

Hello there, @MKT22191.

 

I'd be glad to help you customize your sales tax to get the correct sales tax amount in QuickBooks Online.

 

You can enter the customer's 5-digit zip code in the Shipping to field. Then, make sure that your Shipping from address is your business'. I can show you the steps on how to do that.

 

  1. Log in to your QuickBooks Online company and create an invoice.
  2. Enter the zip code of your customer in the Shipping to box.
  3. Verify the details in the Shipping from box.
  4. Enter the products and services included in the invoice.
  5. Tick the box under the Tax column.
  6. To check the calculation, click See the math beside the Sales tax rate field. This is how it looks like:


     
  7. Select Save and close.

 

If you're still not able to see the correct calculations, I'd suggest contacting our QuickBooks Care Team. They have the tools to verify your account and perform screen share. 

 

To know more about how QuickBooks handles sales tax, you can check out this article: Sales tax in QuickBooks Online.

 

I've also added this article for your future tasks when you're ready to do the monthly assessments of your books: Reconcile an account in QuickBooks Online. This also contains sub-topics such as editing reconciled accounts and export reconciliation reports.

 

 You can always get back to this thread and tag my name if you have other concerns or questions. I'd be happy to answer them for you. Have a beautiful day.

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