How to Check and Change Sales Tax in Sales Forms in QuickBooks Online

How to Check and Change Sales Tax in Sales Forms in QuickBooks Online: Video

          This video lesson, titled “How to Check and Change Sales Tax in Sales Forms in QuickBooks Online,” shows how to check sales tax amounts and, if needed, change sales tax in invoices and other sales forms in QuickBooks Online. This video lesson is from our complete QuickBooks Online tutorial, titled “Mastering QuickBooks Online Made Easy.”

Overview:

            When recording sales in QuickBooks Online, double-check the sales tax calculations. If needed, you can change them. While the automatic sales tax feature based on location in QuickBooks Online is very reliable, it can show an incorrect sales tax amount if the “Sales tax category” for a line item is incorrectly marked as taxable or nontaxable.

How to Quickly Mark a Line Item in a Sales Form as Taxable or Non-taxable:

            To change this in a sales form, check or uncheck the checkbox under the “Tax” column for the line item in the sales form and then click away from the line item to a different line item to force an update to the sales form’s sales tax calculations, if needed. However, you should also update the line item’s default “Sales tax category” after finishing the transaction to save yourself from doing that repeatedly in the future.

How to Check the Sales Tax in Sales Forms:

            The “Select tax rate” drop-down in sales forms lets you either select the default “Automated based on location” choice if using the automatic sales tax feature or select a custom sales tax rate, if you created those. Based on your selection, the sales tax to collect appears next to it. If needed, to see the sales tax information and sales tax calculations and correct them if using the automatic sales tax feature in QuickBooks Online, click the “See the math” link under the sales tax to open a pane at the right side of the sales form window.

How to Change the Sales Tax in a Sales Form if Using a Custom Sales Tax Rate:

            If you selected a custom sales tax rate in a sales form, then a “Sales tax rate” drop-down appears at the top of this pane from which you can select a custom sales tax rate, if needed, and then click the “Close” button to close the pane and apply the custom sales tax rate.

How to Override the Sales Tax Rate or Amount:

            Alternatively, to manually enter the sales tax, click the “Enter sales tax manually” link and then click the “Edit” link in the section that appears. Then enter the “Rate” or “Amount” for the manual sales tax, select a reason for the override, and then click the “Apply override” button. You can then click the “Close” button to close the pane.

How to Change the Sales Tax in a Sales Form if Using Automatic Sales Tax Calculation:

Check and/or Change the Customer’s Sales Tax Details:

            Alternatively, if you selected the automatic sales tax calculation in a sales form, then a “Customer” tax details section appears at the top of the pane. To mark the customer as non-taxable, click the “Edit” link in this section and then check the “Mark this customer as tax-exempt” checkbox. Then enter the “Reason for exemption” and “Exemption details” in the fields that appear. To apply the changes to these settings, click the “Save” button that appears. Alternatively, to cancel any changes, click the “Cancel” button.

Check and/or Change the Location of Sale or Shipping Address Sales Tax Details:

            If you selected the automatic sales tax calculation, then the middle of this pane shows a “Location and addresses” section. To change this address information, click the “Edit” link in this section. Then double-check the location of sale and/or shipping addresses to make sure they are correct. When correct, click the “Save” or “Save and continue” button to return to the main pane. Alternatively, click the “Cancel” button in this section to cancel it and return to the pane.

Check and/or Change the Sales Tax Details for the Sale Form’s Products and Services:

            If you selected the automatic sales tax calculation, then the “Products and services” section shows the sales tax collected per line item and the total sales tax. To change the taxable status of any of these items, click the “Edit” link in this section.

            Then click the “Edit sales tax” link for any item whose sales tax status you want to change and select either the “Taxable – based on location only” option button, the “Nontaxable” option button for nontaxable items, or select a specialized sales tax category option button in the section above those two option buttons. Then click the “Done” button at the bottom of the pane to return to the main “Products and services” section of the pane.

            Then click the “Save and continue” button at the bottom of the “Products and services” section to save your changes. Alternatively, click the “Cancel” button in the “Products and services” section of the pane to cancel any changes and return to the main sales tax pane.

If Needed, Manually Override the Sales Tax Rate or Amount:

            If you still need to override the automatic sales tax calculation after double-checking the sales tax settings when using the automatic sales tax calculation, click the “Override this amount” link in this pane’s lower-right corner. Then click the “Edit” link in the section that appears.
Then enter either a new “Rate” or “Amount” to charge for sales tax and then select a “Reason” from the drop-down in the new section that appears in the pane. Then click the adjacent “Apply override” button to confirm the override. You can then close the pane by clicking the “Close” button in its lower-right corner.