sales tax changed

Anonymous · ‎November 02, 2018

Washington DC changed its sales tax from 5.75% to 6% in October of this year. I am now, looking back at all the sales from October and realizing the sales tax is wrong. How do I make this change into QB to fix the rates in order to reflect on those past sales receipts? We use Shopify as our POS system and sync the sales into QBO- so our Shopify sales receipts reflect the 6%, but the October sales receipts in QB is showing the 5.75%

Charies_M · ‎November 02, 2018

You've reached the right support, @Anonymous.

I can help you modify the sales tax rate for Washington in QuickBooks Online (QBO).

Changing the sales tax rate only affects future transaction. I'd be happy to show you how:

Go to Taxes from the menu.
Choose Sales Tax.
Under Related Tasks, select Add/edit tax rates and agencies.
In the Sales Tax Rates and Agencies table, choose the rate you want to change and select Edit.
In the Edit Sales Tax Component window, change the rate.
Click Save.

Here's an article about editing sales tax rate that is made handy for you to visit: Edit Sales Tax Rate in QuickBooks Online.

To fix the rate for the old transactions from October, we can create a sales tax adjustment in the Sales Tax center. Let me guide you through how:

Go to Taxes from the left menu.
Choose Sales Tax tab.
Click Record Tax Payment.
Check the box for Make Adjustment.
Once done, click Record Tax Payment.

To learn more about making sales tax adjustments, please check out this article: Record, delete, or edit a sales tax payment.

Keep in touch if you need more help with sales tax adjustments in QBO. It's our pleasure to help.

Anonymous · ‎November 02, 2018

Thank you so much for your quick response! I was able to change the sales tax rate for the future. Thank you for that!

I am still a little confused about changing the rate for the October sales. When I go do the "Record Tax Payment" and check the box "Make Adjustment" it allows me to enter a $ amount, not change the percentage rate. And this is the page I use to record when I have paid the sales tax for the month. Maybe I am in the wrong place? But when I click on the Taxes tab on the left side, it takes me directly to the Sales Tax Center where I can see how much sales tax i owe to the different states we sell.

Let me know what you think.

Thanks very much!

Charies_M · ‎November 02, 2018

Hi there, @Anonymous.

Good job in changing the sales tax rate successfully.

You're on the right track. When making adjustments in QuickBooks Online, you'll need to manually calculate the difference between the correct tax amount for the new rate and your current Tax Amount for the old rate. This is the amount you'll need to enter on the Record Sales Tax Payment window.

Feel free to reach out to me is you have any other questions about this. I'd be happy to clarify things out. You have a wonderful day.

Anonymous · ‎November 04, 2018

ok! I think I understand. But just to be sure -- I will be changing the whole month's tax rate at once. So, the adjustment would be the taxable sales at the 6% rate instead of what QB automatically calculated (the 5.75%). And then I add that into the adjusted amount.

What is a good 'reason' for the adjustment (from that drop down menu)?

Thanks so much for your help!

BettyJaneB · ‎November 05, 2018

Hello, pial.

I appreciate you getting back to us. I'd be glad to provide additional insight on this.

Yes, you are correct. The adjustment that you'll be applying would be the taxable sales at the 6% rate. You may enter a brief description of the adjustment in the Reason section.

Please know that the Community has your back should you have any questions. Have a wonderful week ahead.

Anonymous · ‎November 07, 2018

Thanks so much for the confirmation!

I have one more question regarding this topic: I am working on the bank deposits and connecting the sales receipts with the Shopify transfers. If I adjust the taxes in the sales tax center only, then would it change the tax rate on the sales receipts from October as well? Or is that a separate process?

HoneyLynn_G · ‎November 07, 2018

Thanks for looping back, @Anonymous.

I can share some details about adjusting the taxes in the sales tax center.

QuickBooks doesn't follow the retroactive effect. In that case, even if you change the tax rates, the sales receipt from October will not change. The effective date of the new sales tax rate will be the adjustment date.

Keep us posted if you have other questions. Have a wonderful day!

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