How do I record Sales Tax collected and paid by eBay

You don't, mark those sales as non taxable in QB since ebay is handling it

Because I have the flexibility of desktop I set up a new sales tax item called ebay-NT at a zero rate and use that when I record ebay sales - that way in the event of a sales tax audit I can explain it.  Not an option in QBO with auto sales tax though

@bigleagueseller 

As another option, explore this AST Reporting and Filling app. It doesn't support eBay yet but you may link your Paypal account or upload the CSV data from their new Manage Payments system.

https://taxjar.grsm.io/mytax

Hope it helps.

This is what I do if you want to have your transactions exactly match what is entered at PayPal, especially if you have the Quickbook Online App connected to download transactions from PayPal. Currently, the App will download payment transactions as sales receipts including the PayPal fee. However, Tax collected by eBay will be a separate downloaded transaction displayed as an expense.

You can't set your sales receipt items as taxable because that would require you to setup a tax item for every state agency and since eBay is paying these taxes on your behalf, you don't want them included in your sales tax liability in QBO.

Create 2 things in QBO:

1. Create a new "Other Current Liability" account in your chart of accounts. I called mine "eBay Sales Tax Payable".

2. Create a new non-inventory product, I called mine "eBay Sales Tax Collected". Make the income account the "eBay Sales Tax Payable" liability account you created in step 1.

Now when a transaction is downloaded into your online banking tab to be matched, you edit that transaction and make sure the item purchased is NOT taxable. Then add a new line item using the product "eBay Sales Tax Collected" from step 2 above, with the amount from PayPay for "Tax Collected by eBay".  When you save this transaction it may give you an error popup that the downloaded balance does not match, just click yes to continue, it will be enter correctly.

Then on the separate expense transaction downloaded from PayPal, just assign that to the liability account "eBay Sales Tax Payable", which will zero out the tax you collected in the sales receipt.

Basically now you are running a zero amount liability account with deposits from PayPal and immediate corresponding payment back to eBay for the tax collected.

This allows you to actually match downloaded transactions without having ignore them.

I'm not a CPA so this is not considered tax advice. Please consult with your accountant if you have questions on adding these transactions to Quickbooks.

Happy to answer any questions on how this works.

Thanks,

Joe

Hi Joe,

Thanks for the info. The 2020 eBay sales reports break out the sales tax. What about 2019?  I did my taxes, then I realized my income included the sales tax. Do I need to go through all my transactions in 2019 and make adjustments? 

Hi Joe,

"Now when a transaction is downloaded into your online banking tab to be matched, you edit that transaction and make sure the item purchased is NOT taxable. Then add a new line item using the product "eBay Sales Tax Collected" from step 2 above, with the amount from PayPay for "Tax Collected by eBay". When you save this transaction it may give you an error popup that the downloaded balance does not match, just click yes to continue, it will be enter correctly."

I cannot figure out what you mean with online banking tab to be matched. If this is the tab you are talking about, I do not see any option to add products because it shows categories.

Can you please help me out?

Thanks, Carlos

"Now when a transaction is downloaded into your online banking tab to be matched, you edit that transaction and make sure the item purchased is NOT taxable. Then add a new line item"

I tried to follow these steps and this is where I got confused - Could you please explain how I "edit that transaction so it is not taxable" and where do I add a new line item. 

Thank you very much!

Can I do this within a sales receipt?

Hi, @qred1970.

Yes, you can record the tax collected within a sales receipt. I'm here to guide you with the detailed steps.

First, create an expense account for tracking this tax.

1. Open your QuickBooks Online (QBO) account.
2. Click on Accounting at the left pane, then tap on Chart of Accounts.
3. Tap on New, then choose Expense as the account type.
4. Set the detail type, then enter the name of the account.
5. Hit on Save and Close.

Then, set up an item for the tax.

1. Go to the Gear icon, then click on Products and Services.
2. Select New to add a new account.
3. Choose either non-inventory or service as type.
4. Fill in the details, then pick the expense account created from the Income account drop-down.
5. Click on Save and Close.

Once done, you can now add the tax amount to your sales transaction.

1. Go to the +New icon, then click on Sales Receipt.
2. Enter the sales details.
3. Add the tax item under the Product/Service column as a negative amount.
4. Save the transaction.

For additional resources about handling your taxes in QBO, you can check out the topics from this link: Manage taxes in QuickBooks.

To keep control of your income and customer's transactions, you review the details from this article: Topics about your company's income and customers.

If you have any other questions about sales and taxes, please notify me by adding a comment below. I'm more than happy to help. Have a great weekend!

Cart us on [removed] for me information 

---

Hello @Angelyn_T , you detailed how this can be done with QBO, is it the same procedure for QBDpro?

TIA for your input!.

Thanks for joining this thread, @Taboo.

QuickBooks Online and QuickBooks Desktop are two different platforms. To achieve your goal, I convert the steps shared by my colleague Angelyn_T into QuickBooks Desktop. Just follow the steps below.

1. Go to the Lists menu.
2. Select Chart of Accounts.
3. Click the Account drop-down, then choose New to create a new account.
4. Select Expense or Other Expense as an account type, then select Continue.
5. Enter the Account Name and other details.
6. Select Save & Close.

Then, set up an item for the tax.

1. From the Lists menu, choose Item List.
2. Click on the Item drop-down arrow and choose New.
3. Select the type of item you want to create.
4. Fill out the item fields.
5. Click OK.

After creating the item, add it to the last line of your sales receipt and enter the negative amount of the calculated tax. To create a sales receipt:

1. Go to the Customers menu.
2. Choose Create Sales Receipts/Enter Sales Receipts.
3. Fill in the necessary information. Add the Expense Item in the next line with a negative amount.
4. Click Save & Close.

For more information about creating sales receipts in QBDT: Create sales receipts.

You can read our rundown and learn more about sales tax-related tasks in this links: 

• Set up sales tax in QuickBooks Desktop
• Review sales tax reports

I'm just a comment away if you have other concerns. I'd love to help you out anytime. Have a great day ahead and stay safe!

What "Tax Agency" do you have selected for your "eBay-NT" Item in this case?

Hello there, @mkaethe.

When selecting the Tax Agency, you're the only one who can choose with it. However, if you're unsure which tax agency should be chosen. I'd recommend getting in touch with the agency or your tax advisor.

I've got a link here where you can find articles about managing sales tax in your account: https://quickbooks.intuit.com/learn-support/en-us/taxes/pay-sales-taxes/08?product=QuickBooks%20Onli....

You can always come back here if you need anything else. Stay inside and keep safe.

@Maybelle_S, I should have directed my question to @Rustler.

The issue is that the "Tax Agency" in this case should not be assigned to an actual taxing agency (i.e. Ohio Department of Taxation) as this is for taxes that will never be filed as they are collected and remitted by eBay. "Tax Agency" in this case would simply be a place holder and my question was what @Rustler is using or would recommend (i.e. assign eBay (Vendor) as the tax agency).

Hi mkaethe,

Did you ever find out the answer to this?