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Frequent Explorer **

Capping Sales tax

What is the proper procedure for creating an invoice that is taxable, but the sales tax is capped at the first $5,000.00?  And to make sure it represents properly on the Sales tax liability report.

3 Comments
QuickBooks Team

Re: Capping Sales tax

It's a pleasure to have you here, @LCain,

 

At the moment, we're unable to set up a sales tax cap for your sales transactions. Once you create a taxable sale, the system will automatically apply the tax to the total amount on the invoice.

 

As a workaround, you can keep track of your taxes by pulling up a Sales Tax Liability report. Here's how to do that:

 

  1. Go to the Vendors tab.
  2. Choose Sales tax from the drop-down.
  3. Select Sales Tax Liability.

To make corrections to sales in a previous period, create a liability tax adjustment:

 

  1. Tap the Vendors tab and select Sales Tax then Adjust Sales Tax Due.
  2. Fill out all necessary information.
  3. Choose which type of adjustment you want in the Adjustment section.
  4. Click OK.

You can also try the workaround shared by our contributors in this thread: Charge sales tax with maximum limit.

 

Please let me know once you've tried the steps. I'm here if you need further assistance. All the best!

Frequent Explorer **

Re: Capping Sales tax

Years ago I was told how to do it in QB.  It works fine, but a lot of steps.  I was hoping there was a easier way.  My way causes a problem if you don't switch back to the original settings.  My way you set a Capped in the item list with 0% sales tax rate.  When creating an invoice you type in the info as normal, next line under item you select Capped.  Go to next line in the item column select the county in which sales tax is to be charged.  Manually calculate the sales tax and enter it.  

In the "tax" box at the bottom of the invoice select Capped. 

Please verify this with a QB Pro.  but this also makes it so my sales tax report comes out correctly.  Just a lot of steps and you have to remember to change info back or the next invoice will not be correct.

 

QuickBooks Team

Re: Capping Sales tax

Hello there, @LCain.

 

As of now, there isn't an automatic way to set up a sales tax cap in QuickBooks. You can set a sales tax cap by tracking it manually. However, this may cause some issues in your reports.

 

I understand how important the option of setting up sales tax cap automatically. I'll do take note with this and pass along the information to our product engineers. This way, they'll be able to know and work on with this.

 

For further details and future reference about sales tax, you can check this article: Set up sales tax in QuickBooks Desktop.

 

I'm always here to help you if you have further concerns about sales tax cap, just add a comment below. Have a great day ahead!