Experienced Member
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Cash basis sales tax and applying customer credits

We do cash basis accounting. When a customer over pays and we apply the credit to the next invoice, it shows the paid date of when we received the credit. The issue is when the new invoice is created in a period different than when the credit was received (we pay sales tax monthly). How do I make it so I don't need to amend sales tax returns on previous periods due to customer credits?

Moderator
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Re: Cash basis sales tax and applying customer credits

Hello there, @KHave.

 

Thank you for providing details. I can share some insights about the cash basis sales tax in QuickBooks Desktop.

 

The accounting method you use can affect the amount of sales tax you owe. When using the cash basis method, you only report your income when you create a transaction and receive its payment.

 

You'll only have to pay the amount on your sales tax center, and there's no need to amend. If necessary, you can reach out to your accountant about which accounting method is most appropriate for your company.

 

Keep me posted if you have follow-up questions about sales tax. I'm still here to help you further. Have a good one.

Experienced Member
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Re: Cash basis sales tax and applying customer credits

Thank you for your reply! But what we do is apply the customers credit to next invoice. Which is essentially creating a transaction and receiving it's payment, right? So it would need to be recorded. The issue is that the next invoice's payment date is in a later period that I've already filed. 

QuickBooks Team
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Re: Cash basis sales tax and applying customer credits

You're correct, KHave.

 

You'll need to create the transaction first. Then, receive the payment.

Have you tried changing the sales tax settings from the preferences? If not, here are the steps:

  1. Click Edit.
  2. Click Preferences.
  3. Click Sales Tax, and then click the Company Preferences tab.
  4. Under When do you owe sales tax? section, choose Upon receipt of payment (Cash Basis).
  5. Click OK.

If the settings are correct, you'll want to run a Verify Data Utility tool to check for data errors. Just press File, Utilities, and then Verify Data

 

If prompted, click Rebuild Data or go to File, Utilities, and then Rebuild Data

 

If there's anything I can help you, please don't hesitate to comment below.

Experienced Member
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Re: Cash basis sales tax and applying customer credits

 
Experienced Member
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Re: Cash basis sales tax and applying customer credits

Shelia,

 

All settings are set to cash basis. But when I apply credits to invoices, it's putting those transactions under the period which we received that credit instead of when I applied it.