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jaredjbaker
Level 1

County charges 7.85% sales tax on the first $500. How should invoice be created?

Only the first $500 of sales are taxed at 7.85%. So a single invoice is never taxed more than $39.25. What would be the most efficient way to set this up? Sales Tax is already set up in Company Preferences.

3 Comments 3
JessT
QuickBooks Team

County charges 7.85% sales tax on the first $500. How should invoice be created?

Hi jaredjbaker,

 

I'll help you with a workaround since we're unable to put a cap on the tax amount for a sales transaction.

 

If you have many items, only mark the ones that accumulate to $500 as taxable. However, if you only have one item that is more than $500, divide it into two lines. Let's say an item is $600 per piece. You'll want to enter the right quantity to achieve $500 on the first line, like in the screenshot below.

 

 

  1. Click the QUANTITY field of the first line, press the Equals key ( = ) on your keyboard and type  500/600. We use the item's price to get the right qty.
  2. Press the Enter key and tag the first line as taxable. 
  3. Click the QUANTITY field of the second line, press the Equals key ( = ) and type 100/600.
  4. Press the Enter key and tag the second line as non-taxable.

That's it. Please let me know if you have other questions about capping the tax of your sales transactions. You can also find more references by clicking on Help and searching for the topics you like.

jaredjbaker
Level 1

County charges 7.85% sales tax on the first $500. How should invoice be created?

Thank you for your suggestion here. We have attempted this for a few months and have gotten some pushback from customers because when an invoice is only for labor, it gets confusing to see it split our.

 

We bill at $95/hr, so if we need to bill a customer for 6 hours and no materials, then how would you suggest entering this? It seems messy to bill 5.26 hrs as taxable and .74 hrs as nontaxable and the rounding would make us off a penny here and there. (Given, it'd be cleaner if we billed $100/hr.)

Rubielyn_J
QuickBooks Team

County charges 7.85% sales tax on the first $500. How should invoice be created?

Thanks for getting back in here, @jaredjbaker.

 

I can see here how this feature is important to you. However, as mentioned by my colleague above, putting a cap on the tax amount for sales transactions is unavailable. 

 

Thus, you may need to calculate this manually. In the first line, enter the 5.26 hrs as taxable and 7.4 hrs as nontaxable. In this case, there will indeed be a penny that is a rounding difference since the amount is not whole. 

 

Additionally, I've added this resource to help you manage sales tax in QuickBooks Desktop: Set up sales tax.

 

Feel free to get back in here if you have other QuickBooks concerns. I'll make sure to get back to you as soon as I can. Stay healthy and have a wonderful day.

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