Sales Tax when sale happens out of state

A warm welcome to the Community, renata_hauff.

Allow me to provide a little information about how sales tax is calculated in QuickBooks Online.

Each state has its own definition of what is taxable and what is not, so you will have to research each state sales tax page to find out what the situation is in that state. The new sales tax feature in QuickBooks Online looks at a variety of information to calculate your sales tax:

• The state where you have nexus and are registered to collect sales tax.
• The physical address of your business.
• The physical address on the sales receipt or invoice.

The first issue is the state your company set up in. You will need to register with the state for a sales tax permit and figure out what instate sales are taxable. Is sales tax reporting in your state on an accrual or cash basis, and the state will set the frequency of filing/paying sales tax. However, I'd suggest consulting an accountant to help and guide you better.

Here are some recommended articles for more information about setting up sales tax:

• Set up and use Automated Sales Tax.
• Sales Tax in QuickBooks Online.

If you require more information about sales tax, feel free to leave a reply below. Have a nice day.

I have out of state sales but QB is charging sales tax anyway. How do I stop that? I have 0.0% but no tax agency selected. I didn't know this was going on.

It could be the item/service is taxable, BPK. This is why it's calculating taxes.

If the out of state customer shouldn't have sales tax, you can uncheck the TAX box in the sales transaction (refer to the screenshot below).

You can also change the customer's setup to tax-exempt. This way, they won't be charged sales tax automatically. Here's how:

1. Click Sales, then go to the Customers tab.
2. Select the customer to open their profile.
3. Click Edit.
4. Go to the Tax info tab.
5. Put a check mark in the This customer is tax exempt box.
6. Select a reason for exemption, then click Save. 

If anything arises, please don't hesitate to drop a comment below. 

I am selling on eBay and get 100 different customers a week. I change them to non taxable after the fact. I changed the invoice to non taxable and on the bottom to out of town and no change.

Thanks for updating us, @BPK.

I also appreciate you for performing the solution provided by my colleague in this thread.

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. Please see sample screenshots attached below for your guidance.

I recommend contacting our QuickBooks Online Technical Team since the issue persist. By doing so, they can check this on their end if there's an ongoing investigation about this.

Here's how to contact them:

1. Click the Help icon at the right top.
2. Select Contact us.
3. Enter a brief discussion of your concern, then click Let's talk.
4. Choose a way to connect to our live support team.
   

Let me know how the call goes by leaving a comment below. I'm always around whenever you need help.

Something I found out. I have to go to invoice and change each item to untaxable as it didn't do any good to use out of state with 0% tax rate because it still charge tax even though it didn't show up on invoice.