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Level 2

Changing default tax rate

Currently when i make an invoice the tax rate is automatically set to "based on location" which is the retail rate for my state. I mostly do wholesale so every invoice i have to change it to my custom wholesale tax rate I made. I can't figure out how to change the default tax rate. I even tried to find a work around by setting a tax rate for each individual customer, but I couldn't figure that out as well. I was on the phone with customer support for 1 hour and the problem couldn't be solved. 

 

FYI I am the master admin and have tried using QBO in incognito mode, but it didn't change anything. 

 

Here's some things i tried so far. 

Attempt 2 


At this link number 5 simply does not exist on my end. I only have the option to make the customer tax exempt. 

 

Attempt 1 

 

At this link number 3 does not exist for me. I simply don't have this option.

 

I have also gone to taxes->sales tax settings->select custom rate-> edit but no options here exist for me to set my custom rate as a default tax code.  

I honestly can't believe how hard it is to do this. It really shouldn't be this difficult and shouldn't take 3 plus hours of my time to research, contact customer support, and write this post just to solve this.

Solved
Best answer May 29, 2020

Best Answers
Highlighted
QuickBooks Team

Changing default tax rate

We appreciate and have taken note of your feedback about the tax settings in QBO, SteelRoots.

 

For now, there's no option to change the default tax rate from Based on location to Custom Rates. I also checked the links that you shared and it looks like Attempt number 2 is an article for QBO Canada, while Attempt number 1 is for QBO Australia. This is the reason why yo're unable to see these options in your account. 

 

QBO USA uses the Automated Sales Tax function, and will always use the Based on location tax rate. For now, you'll need to manually click the drop-down list and select the custom rate when creating your sales transactions. 

 

Let me also share these additional guides when filing and paying your sales taxes in QBO:

 

Let me know if you need anything else. 

View solution in original post

11 Comments
Highlighted
QuickBooks Team

Changing default tax rate

We appreciate and have taken note of your feedback about the tax settings in QBO, SteelRoots.

 

For now, there's no option to change the default tax rate from Based on location to Custom Rates. I also checked the links that you shared and it looks like Attempt number 2 is an article for QBO Canada, while Attempt number 1 is for QBO Australia. This is the reason why yo're unable to see these options in your account. 

 

QBO USA uses the Automated Sales Tax function, and will always use the Based on location tax rate. For now, you'll need to manually click the drop-down list and select the custom rate when creating your sales transactions. 

 

Let me also share these additional guides when filing and paying your sales taxes in QBO:

 

Let me know if you need anything else. 

View solution in original post

Highlighted
Level 1

Changing default tax rate

Hi Steelroots, 

 

I totally feel your pain.  Ive just switched a few months ago from 18 yrs using QB Desktop to QBOnline and this is my only regret.   

 

The sales tax is a nightmare every month.  The default "based on location" is driving me nuts.  I have yet to find a work around and am also having to change each individual sale which is ridiculous.  I cant believe that we are the only ones having this problem with so many tax rates across the country, this should be much easier to customize!!  

 

I too have spent way too much time with support.  They are super nice and try to be helpful, but there just seems to be no fix as of now.   

 

PLEASE continue to post if you find an answer!!! I would be very grateful if you did and also anyone else having this problem, please post so maybe they will get it fixed!!! 

Thanks for posting!!! 

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Level 1

Changing default tax rate

Same problem here, I hate this setup. I have others who make Invoices along with myself and I have to go back every month now to fix this. No one else will take notice and I'm the only one it effects. I used to take me all of 10 mins to run the reports and pay. Now it takes hours. Thanks for the "inconvenience" Quickbooks. I could be spending my time accomplishing other things that consist with keeping a business up and running. I've been using Quickbooks since 2001 and I'm considering using another accounting software.        

Highlighted
Level 1

Changing default tax rate

I too am having problems with setting default sales tax. We mostly ship out of state or out of country, so I want to set the default to "exempt" but there is no place to set default to "exempt". Also, when we ship to someone in our state, it's charging them the tax for their "ship to" location rather than from our "ship from" location. 

 

For every sales receipt, I now have to enter a sales tax option from the drop down menu. I used to be able to set default to "out of state". Now it does not allow me that option. I am extremely annoyed, and considering looking into a different program. Hours wasted with customer service who were no help what-so-ever.

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QuickBooks Team

Changing default tax rate

Hi there, @AliH17.

 

Let me help sort things out for you.  

 

To start, let's set up your customer as a tax-exempt. If you're using the Old Sales Tax Center interface, here's how:

  1. Choose Sales at the left panel and then select the Customers tab.
  2. Select your customer and click Edit.
  3. Go to the Tax info tab in the Customer information window. 
  4. Ensure to remove the checkmark in the This customer is taxable box.
  5. Fill in the Exemption details and then click Save.

If you're using Automated Sales Tax, you'll have an option to exempt your customer from sales taxes. I'll show you how:

  1. In the Customer information window, go to the Tax info tab.
  2. Mark the This customer is tax exempt box.
  3. Input the Reason for exemption and the Exemption details.
  4. Click Save.

Also, The Automated Sales Tax feature in QuickBooks Online (QBO) calculates sales tax amount based on the state where you have nexus and are registered to collect sales tax, the physical address of your business and on the sales forms, the product mapping you've associated with the item you're selling, and the exemption status of your customer. Make sure you've set up the customer's Shipping address. This is to calculate the location of sale based on the address you're shipping from and to. 

 

To add up, QuickBooks shouldn't calculate the sales tax if the item is non-taxable or if you select the Out of State option. 

 

I've added this article for more information about the sales tax rate in QBO: Default customer sales tax rate in QBO.

 

Leave a comment below if you have any follow-up questions. I'll be right here to answer them. Have a great day.

Highlighted
Level 1

Changing default tax rate

I am also stuck with this situation.  In South Carolina, accommodations are taxed at a different rate than other items.  In my county it is 7% to the state and 3% to the county; normally sales tax is 6%.  I am unable to set the tax rate for my accommodations items to 10%.

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QuickBooks Team

Changing default tax rate

Good day, bugg2844.

 

I understand that you want to set up a custom rate for your accommodation items. 

 

QuickBooks Online uses automated sales tax. It automatically calculates taxes based on where you sell, where you ship, and what you sell.

 

All we have to make sure is that the details when recording a sales transaction are correct. Please click this link to learn more about how QuickBooks makes each sales tax calculation accurate.

 

Also, here are some of the article you can check for your reference:

I'll be here if you need anything else. Wishing you all the best!

Highlighted
Level 1

Changing default tax rate

Yes, but it is calculating it wrong.  The rate is 10%.  Quickbooks is calculating 6%.

 

Highlighted
QuickBooks Team

Changing default tax rate

I appreciate you coming back to us, @bugg2844.

 

Allow me to jump in for a moment and help make sure this gets sorted out.

 

You'll want to use the USPS Zip Lookup Tool. This tool gives you a Zip + 4-digit code that can validate your address to ensure the complete accuracy of the tax amount collected.Let me show you how.

 

  1. Go to this link: https://tools.usps.com/go/ZipLookupAction_input
  2. Select the Find by City & State button in the middle.
  3. Enter the City and the State then click on Find.
  4. In the results, you will see the correct zip code to use.

 

Check out this article to learn more about the verifying correct addresses for your tax filings: Validate an address for taxes.

 

However, if the calculation is still incorrect, I recommend you proceed with contacting our QuickBooks Support Team. One of them will be able to take over and provide further assistance regarding your sales tax concern.

 

Here's how to reach us:

 

  1. Sign in to your QBO account and click on Help.
  2. Click on the Contact us link.
  3. Enter your concern and click on Let's talk.
  4. Choose either Start messaging or Get a callback.

 

Due to COVID-19, we have limited support and reduced our support hours too. To make sure we address your concern on time, you can check their work schedule in this article: Support hours and types.

 

Also, you can run the Sales Tax Liability report to view your sales tax info anytime. This will make sure everything is accurate before you file and pay your sales tax return.

 

Know that the Community and I are here to help with anything you need. You can always share your concerns here. I'll make sure to get back to you. Happy weekend.

Highlighted
Level 1

Changing default tax rate

We have to subscribe to a whole other service to determine sales tax rates.  Quickbooks does not determine any special taxing districts.  I would definitely not trust that they correctly determine the sales tax rates by location.  And remitting the tax is a whole other nightmare.

Highlighted
Level 1

Changing default tax rate

Agreed! This 'accurate' tax calculator Quickbooks is using is absolute garbage. We live in a county that is higher than the rest of the state and last month Quickbooks decided to switch our tax rate without us doing anything and now we have to go back through and fix all of the previous invoices. Not only that we also have to click a drop down box to pick the correct sale tax. Just one more 'extra' step for the entrepreneur, thanks Quickbooks!

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