We have a tenant that was behind on his rent since September of 2018. His rent is $1,000 per month plus sales and use tax.
In 2018, sales and use tax in Broward County, Florida was 5.8% so his rent was 1,058.00
for September, October, November and December 2018 (months he was behind).
In 2019, sales and use tax in Broward County, Florida changed to 6.7% so his rent in 2019 is now 1,067.00 per month.
He just paid us September 2018 through March 2019 today. Our accountant told us that since he is paying in 2019, he has to pay the 6.7% tax rate for all of his rent (including September - December 2018).
We have a dividing date on QuickBooks of 12/31/2018 for our accountant and 2018 taxes are done, so we can't modify the September through December 2018 invoices to 6.7% tax rate.
According to our accountant, he should've paid us 7 months x $1,067.00 = $7,469.00. We let him know. He actually gave us $7,459.00 (ten dollars short).
Since I can't update the 2018 invoices, according to QuickBooks, he owes us $7,433.00 (4 months at $1,058 and 3 months at $1,067).
How can I make the adjustment in QB so it can reflect the correct amount that he paid (won't show as over payment) and so sales and use tax will be correct?
1. Disregard the $10.00 under-payment. He actually had a $10.00 over-payment from last year, so that takes care of itself.
2. I did the following. Not sure if correct. I created an invoice dated today 3/7/2019 for the difference that was showing as an over-payment $36.00*. Coded it to rental income (non-taxable). Then, I applied the $36.00 he had showing as a credit to the invoice and paid it. Lastly, I did a journal entry were I debit $36.00 from the rental income account and credit $36.00 to the sales tax payable account. Does that work?
*NOTE: $36.00 that showed as over-payment was for the September through December 2018 (4 months) rent invoices where he had to pay 6.7% on 1,000.00 rent instead of the original invoiced 5.8% on $1,000.00 rent since he paid it in 2019.
Let me help you with adjusting and correcting your sales tax in QuickBooks Desktop.
I can provide you with easy steps on how you can adjust and correct your invoice sales tax.
Go to the Vendors menu and select Sales Tax then Adjust Sales Tax Due.
In the Sales Tax Adjustment window:
Enter the adjustment date, sales tax vendor, adjustment account and other relevant information. Note: Do NOT use sales tax payable for the adjustment account. Choose an Income account if you are making the adjustment because you received a discount/credit or if you are entering a negative rounding error. Choose an Expense account if you are making the adjustment because you need to add penalties and fines or if you are entering a positive rounding error.
In the Adjustment section, choose if you need to increase or reduce sales tax then enter the adjustment amount.
(Optional) In the Memo field, enter any additional note.