Thanks for the explanation and the KB, Tori B.
Unfortunately this is not going to work for us.
We just opened our store and setup our register with a link to Square, our payment processor.
I extract the transactions and the payment details from Square, merge them in an excel, calculate my taxable and non-taxable totals, then create the sales receipt in QB. On the Square payment details I only have a lump sum for discounts and taxes. On the transaction extract I have the items with prices, discounts and tax amounts.
In the register, all items are scanned the way we get them on the counter, thus, any sequence of taxable and non-taxable items, plus, we can have taxable and non-taxable discounts.
So, the Square extract and my Excel is not in the right order to first (or last) have all taxable items, then add the taxable discount, then all the non-taxable items and discounts. Further, we actually would want the QB sales receipt match the register receipts and reports.
When I added the taxable discount to my test order I had assumed, that after I provide the correct discount amount, and the sales receipt is set to use 8.75% tax, that QB just calculates the tax from the entered amount. But apparently this is not the case.
But this still gave me the right idea how I can resolve my problem. Instead of creating a Discount Tax item of type Discount, I deleted it again and created it with type Other Charge, still pointing to my discount account.
Testing the same order with both discounts at the end shows the correct tax and total amount.
I checked my sales tax report and it shows the correct sales amount and tax owed. And my discount account shows the correct value as well.
So, thanks again, as your information still got me the right idea how to resolve my problem.
And one last request: PLEASE bring back QB Desktop!!! We use assembly items heavily, buy in bulk and sell in ounces and your QBO just does not have any of these features.
