I work in Interior Design and my client paid for a purchase that might not be made till next year. How to I classify this transaction so I do not get taxed.

Thanks for visiting the Community today, @Sahil I. I'll guide you on recording the advances payments made by your client. 

When you receive an advance payment from a client, you will need to record it as a liability. To do this, let's set up a deposit or retainer process for your company. 

Here's how: 

1. Go to the Accounting menu and select Chart of Accounts.
2. Select New, then select Other Current Liabilities from the Account Type drop-down menu.
3. From the Detail Type drop-down menu, select Trust Accounts - Liabilities.
4. Enter a name for the account, then select an option from the When do you want to start tracking your finances from the is an account in QuickBooks? dropdown list.
5. Select Save and close.

After that, create a retainer item. Here's how: 

1. Go to the Settings menu, then select Products and Services.
2. Select New, then select Service from the Product/Service information panel.
3. Enter a name for the new product or service item.
4. From the Income account drop-down menu, then select Trust Liability Account. 
5. Select Save and close.

You can now select the item when creating an invoice or sales receipt for a deposit or retainer payment. Then, receive the payment against it to turn that liability into income. 

Check out this article for more insights about this process: Record a retainer or deposit.

To make sure the transactions will not be taxed, I'd suggest consulting your accountant for proper posting of transactions. 

For future reference, read through this article to know more about recording and making bank deposits in QuickBooks Online. 

Keep in touch if you need anything else. I'll be sure to get back and help.