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Level 2

Tax Exempt customers

I have a tax exempt customer that is buying an item that will in fact be taxable because they are not selling it.  How do I make just one invoice taxable?

5 Comments 5

Tax Exempt customers

I'm here to help make an invoice taxable, kayann714.


In QuickBooks Online, you have the option to mark an item taxable. Just put a check mark in the Tax column when you create an invoice. Then, choose a tax rate so the system will calculate the tax.


Let me show you how:


  1. Click + New.
  2. Select Invoice.
  3. Choose a customer and enter other information.
  4. Mark the Tax checkbox if you need to charge sales tax.
  5. Choose the tax rate.
  6. Click Save.

I've added this link: Set up and use automated sales tax to learn how QuickBooks calculates your sales tax.


Feel free to leave a comment below if there's anything else you need. I'm always around to help you.

Level 2

Tax Exempt customers

Thank you for the help!!!  The items are already checked as taxable, but tax doesn't calculate because the customer is tax exempt.  I am using the new auto tax feature.  What do you mean select the right tax rate?  It chooses for me.


Tax Exempt customers

Thanks for getting back here, @kayann714.


When setting up sales tax in QBO, you're in charge to choose the correct state or local rate for the type of tax you have to track. Then, decide the tax agency that you send your tax payments to. For more info, please visit our Set up and use the automated sales tax feature page. 


If you’re unsure about the correct rates, you may check your tax authority’s website, or consult your accountant. If you don't have one, here's how to find one near you.


Also, you may pull up the Sales Tax Liability report to get a detailed look at the taxes you owe. This is to make sure everything is correct before you file and pay your sales tax return.


Should you need anything else, don't hesitate to comment below. I'm always around to help. Stay safe and take care always.

Level 4

Tax Exempt customers

I don't believe your question was answered @kayann714 . I have the same issue; I need to apply sales tax to a single invoice for an otherwise tax exempt customer.


Tax Exempt customers

Hi @Sibyl,


Thank you for reaching out to us here in the Community space. Allow me to step in and share information about your issue regarding applying sales tax.


Our system depends on how you set up your customers for sales tax. The only workaround to allow taxes is to edit the settings or create another customer with sales tax enabled.


We've also compiled some tips and guides about setting up tax-exempt items and customers. For more information and detailed steps, check out this link: Understand and set up sales tax-exemptions in QuickBooks Online.


Comment below if you have more concerns about sales tax or entering invoices in QuickBooks. We're available 24/7 to assist in this space. Take care.

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