How do I enter overpaid sales tax?

Hi there, @LMRC.

It would be my pleasure to walk you through the steps on how to record sales tax overpayment in QuickBooks Desktop. 

Here's how: 

1. Go to the Banking menu on the top bar. 
2. Select the Make Deposit button.
3. Click OK in the Payments to Deposit window. 
4. In the Deposited To drop-down menu, choose the right bank account. 
5. Pick a Date. 
6. Complete the information in the following fields: 

• Received From -  pick the agency's name where you overpaid. 
• From Account -  select Sales Tax Liability account since you overpaid the sales tax. 
• Amount -  enter the total amount you overpaid. 

       7. Tap Save and close. 

Also, I'd recommend consulting with your accountant for you to be guided properly in applying the sales tax adjustments to your Chart of Accounts.

You can always run the Sales Tax Liability report. This repots shows a summary of the sales tax you’ve collected and owe to your tax agencies. Simply go to the Reports menu, then choose Vendors & Payable, and hit Sales Tax Liability. 

Please, browse through this article below about managing sales tax in QBDT. 

• Process sales tax adjustment

You can leave a comment below if you have other questions. I'm delight to help. Have a great day ahead!

Hello @MichelleBh,

I am not sure I follow why do we post the overpayment as a deposit. We need to record the extra payment from the bank account, not the deposit.

Thank you,

Polina

Thanks for getting back to me, Polina.

We'll have to record the overpayment as a deposit since you still need to wait for a refund.

I'm just a post-away if you need help.

what if sales tax was over paid, then a credit was issued (not a refund) and is to be applied to future sales tax payments?  Example I have a $3000 credit but only $500 is due this month.  How to I post the payment of the $500 when it is a credit?  thanks

Id like to know this as well. I over paid and have a credit at the CRA, no refund being issued. How do i post this credit so it gets applied to the next tax report and reduce the amount owing by the amount of the credit. 

Thanks for sharing in the QuickBooks Community page, @JennaB2.

Based on your sales tax concern, I can see that you're using QuickBooks Online Canada.

We do have a separate page for the QuickBooks Community Canada region where you can share this question. 

Simply enter your concerns or queries on the page: https://quickbooks.intuit.com/learn-support/ca-quickbooks-community/misc/03/community-ca.

If you have any QBO US concerns, feel free to post them here in the US Community page. We'll be here to help you out. Have a good one.

I'm in the US and need an answer to this question. I still need to pay taxes in QBO to make the amount go down. I have paid in real life but need QB to know I paid via a credit.

Thank you for being a part of the community, @AM4CC. I can share some information to help you sort things out.

In your case, we can make a sales tax adjustment. This way, you won't have to worry about making corrections when it’s time to file and it'll keep your sales tax records accurate. I'll guide you through the process.

Let's start by setting up an account for the sales tax adjustment. Here's how:
 

1. Go to the Accounting menu.
2. Select Chart of Accounts.
3. Click the New button.
4. From the Account Type drop-down, select Income.
5. Select the account’s Detail Type. Use Sales of Product Income for an income account.
6. Name your adjustment account.
7. Select Save and Close.
    

After that, we can now proceed with adding an adjustment to your sales tax:
 

1. Hover your cursor over the Taxes menu, then select Sales tax.
2. From the Due Date Start and Due Date End dropdowns, enter the date range then, Refresh.
3. Locate the tax period you need to adjust and click View return.
4. Select Add an adjustment.
5. From the Reason dropdown, choose the reason for the adjustment.
6. Add an adjustment date.
7. Choose the account for adjusting sales tax from the Account dropdown menu.
8. Enter the adjustment amount.
9. Then select Add to confirm.
    

If you have clarification, you may refer to this article: Add sales tax adjustment in QuickBooks Online.

I've also added the following articles for future purposes:
 

• Set up where you collect sales tax in QuickBooks Online
• Manage sales tax payments in QuickBooks Online
   

Please don't hesitate to contact me if you require any more assistance with managing your sales taxes. I'll always be available. Take care of yourself!

I still need the credit there because that is how I am actually paying my state taxes, using credit with no actual money exchanging.

Hello, AM4CC.

Thanks for getting back to us. Allow me to chime in and provide information about paying sales tax in QuickBooks Online (QBO).

The steps shared by my colleague above should help you record your sales tax payment. Since this is a credit, ensure to choose an income account, such as Other Income in the Account drop-down.

You can use the following accounts when tracking sales tax adjustment in QBO:

• Credit or applying a discount: Select an income account, such as Other Income.
• Fine, penalty, or interest due: Select an expense account.
• Rounding error: Select an income account for negative errors, or an expense account for positive ones.

To learn more about managing sales tax payments, consider checking out this article: Manage sales tax payments in QuickBooks Online.

I also recommend visiting our website for more tips and other resources you can use in the future: Self-help articles.

Please let me know if you have additional questions about sales tax or anything else in the comment below. I'll be here to assist. Stay safe.

I added the adjustment then I get the record payment screen. I have to enter the tax amount, date and my checking account. It then takes the amount out of my checking account, which I do not need/want to happen. Now what do I do?

It also took out the amount from my sales tax, making my credit even larger. I need it to show the credit shrinking with each payment.

Hello there, @AM4CC.

Let me clear things up and help you manage your sales tax payments correctly.

It's possible that you haven't selected an income account when adding a sales tax adjustment that's why the credit doesn't decrease your sales tax payment, and the credit gets bigger. To correct this, let's delete the sales tax payment and only add an income account when making an adjustment. Here's how:

1. Sign in to your QuickBooks Online (QBO) account.
2. Click Taxes from the left menu, then select Sales Tax.
3. Find the paid sales tax and click the View Tax Return under the Action column.
4. Click the date link under Payment details.
5. On the Sales tax payment page, select Delete.
6. Choose Delete again to confirm.
7. Once done, go back and add the adjustment.

However, I still recommend seeking help from your accountant on recording this. This way, they can provide further guidance or other ways how to handle your sales tax payments.

You may also want to run and customize a report to review all the sales and purchase transactions. This article will help you focus on the details that matter the most to you: Customize reports in QuickBooks Online.

Don't hesitate to come back to this post if need more help managing sales tax payments. I'll be around to provide further assistance, @AM4CC.

I can not find an accountant to help me, they all refuse to use QB Online.

Also, if you see above they all mention to create an income account.

Hey there, @AM4CC. 

Thanks for chiming back in! 

You can easily find an accountant near you through our find a ProAdvisor website. It's simple and easy. All you need to do is enter your City or ZIP. Here's the link: 

Find ProAdvisor

If you need any more assistance, don't hesitate to ask. I'm only a post away if you need me. Take care! 

Reason is Credit.

Is Sales Tax Overpayment under Sales of Product Income which is an Income account.

I adjusted the sales tax by reducing it for the discount amount. The journal entry that was created is correct. When I went to pay the sales tax, it showed the amount due and the discount adding together instead of reducing the sales tax due. I think there is something wrong with the software. It is qb enterprise manufacturing and wholesale 23. My CPA is sitting next to me. 

Hi, @ALC1289.

I appreciate you for joining this thread and sharing your query. I'll chime in and give some additional information and a workaround to get this fix.

Since doing a Journal Entry doesn't affect your sales tax due, we can make adjustments to move money into or out of your Sales Tax Liability account.

Here's how to adjust your sales tax due:

1. From the Vendors menu, select Sales Tax, then Adjust Sales Tax Due.
2. In the Sales Tax Adjustment window, enter the needed information.
3. Choose if you need to increase or reduce sales tax, then enter the adjustment amount in the Adjustment section
4. Select OK when done.

From there, we can now adjust the amounts for sales ta items. You can review this article for the detailed step-by-step process and screenshot for your reference: Process sales tax adjustment. It guides you to allocate amounts to match the reporting.

If the issue persists, I recommend contacting our QuickBooks Desktop Support. They will be able to access your account in a safe environment during a screen-sharing session to investigate your concern and give you a possible fix for this concern.

Additionally, I'll share with you this resource in case you encounter problems while working on your sales tax: How to resolve common sales tax issues.

Fill me in if you have more queries about sales taxes in QBDT. I'd be glad to assist you further. Take care always and best regards.