Let me share an insight on how you can record your sales transactions that are supposed to be tax-exempt, along with clearing your Other Current Liabilities account.
I suggest deleting those imported transactions from Square. When you're done, you'll have to record the same transactions, this time without any sales tax. This will keep your books accurate, along with clearing your Other Current Liabilities account.
To avoid this type of issue in the future, go to your Square app and review its settings. Ensure that it includes tax-exempt on your next set of transactions. We recommend you configure your taxes in Square the same way you did in QuickBooks Online.
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If you have any other questions, post them below. I'll be sure to get back to you.
Thanks! I"m worried about deleting the Square transactions and then bringing them back in because I'll have to reconcile them all over. Is there a way to edit the actual transaction to take out the sale tax?
QuickBooks Online is unable to modify the imported transactions. I suggest reaching out to Square's Support so they can investigate why this happened. That way, they can also check if they have an option to exclude the incorrect sales taxes.
I've added these articles to learn more about how the integration between QuickBooks & Square works: