Assign Sales Tax Liability Accounts

QB works on names, that is true for dam* near everything

So the Sales tax payable account is really a parent account, and the names of the tax authorities is a sub account.  So all sales taxes seemingly post to the one sales tax payable account but in reality they are segregated by name.  Easiest solution is to just push all the different states to the sales tax payable account with the name of the tax authority associated.  Then pay sales tax will list the tax due by tax authority

Automatic Sales Tax creates the individual sales tax payable accounts!  Tennessee Department of Revenue-Payable, Florida Department of Revenue-Payable and so forth for each State tax authority.   The problem is that when FL tax is collected QB might "choose" to send it to the TN account or to some other random tax payable accounts!     

I can share some information with recording sales tax payments, @krisknightmail.

Using the automated sales tax, QuickBooks automatically calculates the total tax rate for each sale based on where you sell and where you ship. Then, it will keep track of your state's tax laws to accurately calculate sales tax and returns. 

When you create an invoice or receipt for your customers, it’ll automatically track sales tax.

After making sure that everything is accurate, you can e-file your return on your tax agency’s website or by mail.

Once you're done filing, you can manually record your tax payment to zero out your sales tax from the Taxes menu. That’ll be posted to the correct Sales Tax Payable account.

You can always run a sales tax liability report to see each tax agency, the taxable amount of sales, and the tax owed. Refer to this article for more information: Manage sales tax payments in QuickBooks Online.

See the following article for detailed guidance in filing your sales tax return and recording your tax payments: File your sales tax return and record tax payment in QuickBooks Online.

I've also added some articles about handling tax rates and other relevant topics:

• Learn how QuickBooks Online calculates sales tax
• Use automated sales tax on an invoice or sales receipt

Let me know if you need more help in recording your tax payments by leaving a reply below. Keep safe and have a wonderful day!

I am trying to adjust the sales tax due after paying the sales tax.  Example: QB shows I owe $9.30 but the State only figured $9.00 - how do I write off the .30?

Adjusting your sales tax due after paying is easy in QuickBooks Online (QBO), and I'm here to show you how, @Duckett.

When you received a tax credit, discount, or fine, you can adjust the sales tax you owe in QBO. This way, you don’t have to worry about making corrections when it’s time to file.

Based on your example above, it seems that the state has given you a sales tax discount ($.30). To record it in QBO, you'll have to set up and use an income account to decrease the amount (from $9.30 to $9.00) of your sales tax due. I'd recommend consulting your accountant to help determine the appropriate account and detail types to keep your data accurate. Once verified, proceed with the steps below. 

1. Go to Accounting from the left menu.
2. Select Chart of Accounts.
3. Click New.
4. Choose Income from the Account Type drop-down. 
5. Select the account’s Detail Type (i.e., Sales of Product Income).
6. Name your adjustment account, such as Sales tax due decrease. 
7. Hit Save and Close.

There are two options on how to adjust your sales tax in QBO. If you're using the automated Sales Tax Center, go to the Sales Tax tab to add an adjustment. Here's how: 

1. Go to Taxes from the left menu.
2. Select the Sales Tax tab.
3. Locate the tax period you need to adjust and hit View return.
4. Click Add an adjustment. 
5. Select the Reason for the adjustment.
6. Choose the Account for adjusting sales tax.
7. Enter the adjustment amount.
8. Click Add.

For detailed instructions, see the Add a sales tax adjustment section through this article: Create Or Delete A Sales Tax Adjustment. 

If you're using the old Sales Tax Center, you'll have to check the Make Adjustment box when recording a sales tax payment. Then, enter the adjustment amount, its reason, and then select an income account to track it. I've attached a screenshot below for your reference. For more information, view the Adjust a sales tax payment through this article: Manage Sales Tax Payments. 

Once you're done, you can always run the Sales Tax Liability report. It provides you a detailed look at the taxes you owe and why you owe them. Also, it helps you ensure everything is accurate before you file your return to the tax agency. Just go to the Reports or Taxes menu to complete this task. 

I'll be right here to help if you need further assistance in managing your sales taxes in QBO. Take care, and enjoy the rest of your day.

What about sales tax collected how do I record it as an income?

Welcome to the Community, @wlrn. Allow me to share insights about recording sales taxes collected in QuickBooks Online.

When recording the sales tax you collected, you can use an adjustment. This way, you can decrease or increase the amount of sales tax payment. Here are the reasons when you can use an income account for the adjustment: 

Follow these steps:

1. From the left menu, go to Taxes.
2. Choose the Sales Tax tab.
3. Select the tax period you need to adjust.
4. Hit View return.
5. Click Add an adjustment.
6. Choose the Reason for the adjustment.
7. Select the Account to use for the sales tax.
8. Enter the adjustment amount.
9. Click Add.

When choosing an account, refer to below:

• Credit or applying a discount: Choose an income account, such as Other income.
• Fine, penalty, or interest due: Select an expense account.
• Rounding error: Choose an income account to decrease an amount or an expense account to increase.

Refer to this article for the detailed steps of creating a tax adjustment: Create or delete a sales tax adjustment.

I've also attached an article that will assist you in efficiently matching your accounts: Reconcile accounts in QuickBooks Online.

I'll be around if you have other questions about recording sales tax in QuickBooks Online. Leave the details below. I'll get back to you as soon as possible.

How do you do this if the sales tax liability is too low in QBO, so I need to make sales tax higher per state rounding?  It gives me an error that you can only enter a positive value, which decreases the sales tax liability due.

Thanks for joining the thread, @CynthiaL. I've got your back, and I'll help you get through this so you can increase your sales tax liability in QuickBooks Online (QBO).

A possible reason for the error is that you've selected an income account when trying to add an adjustment to your sales tax. Know that you can only use an income account in an adjustment if your goal is to decrease your tax due. In your case, you'll need to choose an expense account when adding an adjustment to increase your sales tax liability in QBO.

I'll gladly input the steps below so you can increase your sales tax liability in QBO. To begin, here's how:

1. Access your QuickBooks Online company.
2. Go to Taxes, then Sales tax (Take me there).
3. Enter the date range in the Due Date Start and Due Date End ▼ dropdowns, then select Refresh.
4. Find the tax period you need to adjust, then select View return.
5. Select Add an adjustment.
6. Select the reason for the adjustment from the Reason ▼ dropdown menu.
7. Add an adjustment date.
8. Select an expense account for adjusting sales tax from the Account ▼ dropdown menu.
9. Enter the adjustment amount, and then select Add.

For more information, see this article: Create or delete a sales tax adjustment in QuickBooks Online.

You can also seek an accountant's advice if you're unsure of the steps that I've given above. This way, they can provide you with the best way to increase your sales tax liability. In case you don't have an accountant, I can help you find one. Visit this page to get yourself an accountant that's qualified and can help you with your business: Find a ProAdvisor.

In addition, here's an article to understand how QuickBooks calculates your sales taxes: Learn how QuickBooks Online calculates sales tax.

You can also check this page in case you'd like to use automated sales taxes on your sales forms in QBO: Use automated sales tax on an invoice or sales receipt in QuickBooks Online.

@CynthiaL, it's been a pleasure to have served you here in the Community today. If you need further assistance managing your sales tax liability in QuickBooks, feel free to get back to me by clicking the REPLY button below. I'll be happy to help you out again. Stay safe, and enjoy the rest of the week.

How do I add a Sales tax cap? I working with large invoices that have a significantly lower sales tax cap. I have to manually change it every time I open add a payment to the invoice in QBO.

Adding a sales tax cap would be beneficial for you and other business users, @WrgAccntnt. Let me provide additional insights about this feature.

With the automated sales tax, the system will detect the tax amount depending on your clients' locations. I understand that you need to add a higher sales tax cap for your transactions to save time from modifying the details manually. While the option is unavailable, you can continue your current workaround to complete your task. Also, I recommend sending a feature request directly to our product developers. This way, they can determine what enhancements and improvements are needed to make our product more effective and convenient for our users. 

Here's how:

1. Go to the Gear icon, then Feedback.
2. Enter your comments or product suggestions.
3. Tap Next to submit.

Once done, your valuable feedback goes to our Product Development team to help improve your QBO experience. You can track feature requests through the QuickBooks Online Feature Requests website.

When you're ready to file your returns or pay your taxes, review the resources from this article as your reference: File your sales tax return and record sales tax payments in QuickBooks Online.

Please extend your patience about this matter. If you have follow-up questions in mind, let me know by leaving a comment below. I'm always here to help. Have a good one!