Sales Tax Not Calculating Correctly on mark up

Thank you for sending the screenshot, circletax1. I appreciate you providing that visual so we can better understand your concern with the sales tax calculation.

To summarize, QuickBooks Online calculates sales tax for each transaction based on the following parameters:

• The customer's tax exemption status
• The shipping and selling locations
• The type of product or service sold

If everything is set up correctly, the markup item is automatically taxable.

To get more insight into why the sales tax is showing as $356.61 for this invoice, click the See the math link under the sales tax amount. This will break down the full calculation including the agency tax rates and the taxable amount. 

On the same window, you will see a separate line for markup and its sales tax amount. It will also give you the option to override the sales tax amount. 

Let me share these articles with more information on how QuickBooks Online calculates and handles sales tax:

• Learn How QuickBooks Online Calculates Sales Tax
• Override Sales Tax On Transactions In QuickBooks Online

I'd be on the lookout in case you have follow-up questions, circletax1. You can also visit us again anytime you need anything when recording sales and other transactions. I'd be happy to help or point you toward useful resources related to QuickBooks Online.

I know where the calculations are coming from my question is why is it only calculating on what it thinks is taxable and how do I fix it.  When I check the little box that say taxable I need it calculating sales tax on that amount, not on the amounts it wants to charge tax on.

Thanks for your reply, @circletax1.

I'll add some details and route you in the right direction for support to help you sort out this issue with the sales tax calculation in QuickBooks Online.

As provided by my colleague above, there are different scenarios where the system will base its calculation. That said, you'll want to double-check to ensure that the sales tax setup is accurate for taxable customers and the product. This way, QuickBooks will calculate it accurately.

Once verified that it's correct but the issue still persists, I recommend reaching out to our QuickBooks Online Support Team so they can further investigate what's causing this problem. They can also guide you on a possible fix. Here's how:

1. From the Search tab, click Contact Us.
2. Enter your question and select Continue.
3. Review and select from the following: Have us call you, or Chat with us.

Moreover, I'll be adding these articles again where you can read more insights about how sales taxes work in QBO:

• Learn how QuickBooks Online calculates sales tax
• Understand and set up sales tax-exemptions in QuickBooks Online

You can get back to this post if you have other concerns or follow-up questions about handling sales taxes. I'll be around to provide further assistance.

Unfortunately none of this information is helpful.  I know how to set up a quickbooks file.  The customer is set up as taxable.  The Products are set up as taxable.  The system has decided not to charge sales tax on the mark up.  (The mark up is being calculated based on marking a billable expense on a bill and adding it to invoice.)  Nowhere is there a place I can select if mark up is taxable or not but why wouldn't it be attached to the item that is marked up (for example I have the product marked as taxable so the markup should be taxable as well).  On the invoices it doesn't even show the mark up it show just a total for the item.  Every place possible the tax box is checked yet it is not charging tax.

Also you might want to check when you give information out about how to contact your help line.  Step 1 doesn't even make sense.  Maybe try to change your copy and paste answer to say when you're logged into your account go to the top and click on HELP. Then at the bottom click on Contact Us.  Then you pick a topic and put in your question.   Then I can sit and wait to talk to someone that will then take my information again and send it to someone else because the front line people will not know how to fix my problem. 

How can I send an email to someone so I can submit several screen shots of my issue and it can go directly to a technical person and I don't have to explain it a dozen different times?

I understand you already reached out to our customer support team, circletax1. 

I can see the urgency of fixing your tax rate to ensure the calculation is accurate in QuickBooks.  

In QuickBooks, the tax rate calculation is generally based on the three factors shared by my colleagues above. 

Since the issues you encounter with tax rates remain unresolved, I recommend contacting our customer support team again. They have access to the latest information and can provide detailed updates on the situation. Additionally, they can assist you in resolving the tax rate issue by offering solutions and troubleshooting steps. 

Here's how to connect with them:

1. Click the Help menu in the upper-right-hand corner and click Talk to a human.
2. Type in "Talk to a human," then press Enter.
3. Look for I still need a human and click on it.
4. Choose Get help from a human.
5. Pick between Start a chat or Get a callback.

In the meantime, as a workaround, we have two options to address the issue. One is to create a custom sales tax, allowing you to apply the appropriate tax rate to the transaction. The other option is to overwrite the existing sales tax amount in the "See the math" section on the invoice, which will enable us to manually input the correct tax amount.

1. From your invoice, click the See the math hyperlink to see the breakdown of the taxes.
2. Click the Override this amount hyperlink.
3. Enter the Rate column, select Other as the Reason, then click Confirm. 

For complete information about sales tax in your QuickBooks Online (QBO) account, refer to these articles.

• Learn how QuickBooks Online calculates sales tax
• Set up and use automated sales tax in QBO

Feel free to ask any follow-up questions by commenting below. I'll be here until you're able to fix the sales tax rate calculation. Have a great day!

Did you find a solution yet? I am encountering this exact issue. I create a bill, mark the item as billable, a markup is generated, I check the tax box, and I include the customer information. I then create an invoice from the billable expense charge. The tax box is checked next to the item and next to the markup. The markup is automatically generated because the item is saved with a cost that is lower than the sale price. The invoice calculates tax only on the item, not the markup. When I click the see the math link, under the markup, it indicates a taxable amount of zero. It says "Uncategorized - standard rate applied." The item itself shows the full amount as being taxable and says "Standard rate." This caused me to collect insufficient taxes from clients and nearly caused me to remit an insufficient amount of taxes to the state. This is a serious problem.

I have found that the product category does not carry over to the invoice and with out the category it doesn’t know the proper tax rate. So, even though the tax box is checked on the markup, without the category the tax is not calculated. 
I have to copy my description and make a note of the totals, select the category (which deletes all the other information), paste the description back in and manual enter my costs and item numbers. Then it will calculate the tax. 
This really needs to be fixed. 

I have found that the product category does not carry over to the invoice and with out the category it doesn’t know the proper tax rate. So, even though the tax box is checked on the markup, without the category the tax is not calculated. 
I have to copy my description and make a note of the totals, select the category (which deletes all the other information), paste the description back in and manual enter my costs and item numbers. Then it will calculate the tax. 
This really needs to be fixed. 

I spent hours on customer service call. They can see the problem, and that it is glitch in Quickbooks, but they say they can't do anything to elevate the issue to a level of importance that would prompt a look and fix in their engineering department. I am leaving quickbooks because of this issue. Absolutely critical flaw in their system and they don't care. Be careful with the manual fix as well, I changed tax manually and then clicked save, it didn't work. I'm going to Zoho Books, highly recommend!

Manually adding the correct product category to the markup line is the fix. It correctly calculates the tax on the markup when the category is entered on the invoice. But this is slog work that should be a non issue. It’s a complete failure for QBO not to correct this issue. 

Is your item a bundle by any chance?    I'm having an issue where it doesn't increase the tax if you change the quantity on the bundle.  At forst I didn't realize what was going on and why my sales tax filing was always incorrect.   It's been a nightmare. I've paid a ton of penalties for being late trying to figure out where things went wrong.

Anyway, I wouldn't expect any decent response on here.  The QB team will not be of any help to you.