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jstabler
October 5, 2021
Solved

Redeeming Gift Cards Without Using a Negative Amount on an Invoice

  • October 5, 2021
  • 2 replies
  • 0 views

We use QuickBooks Desktop Pro, and I've been having issues with the gift cards. I've seen how to create the liability account and how to handle the sale of a gift card. My problem always comes when we go to redeem the card. Every article says that you have to use a negative amount on the invoice but then every month, my sales tax reports aren't correct because of those negative numbers. I always have to play around with them. Our accountants recommended QuickBooks to us but apparently don't have anyone who actually uses it because they can't help with this.

 

What we're doing right now is the following:

 

Sale of Gift Card

Invoice for a customer with the gift card chosen as a line item (non-taxable) and then receive payment on it.

 

Redeem a Gift Card

Invoice for a customer with the gift card again chosen as a line item (non-taxable) and put in as a negative amount.

 

I can't seem to find a single article that will explain why this is the correct way to do it. Unless there needs to be two gift card line items; one non-taxable, and one taxable at the time it's used.

 

Also, why can't we just use gift card as a type of payment, i.e. cash. That seems so much simpler to me.

 

Any help on this is greatly appreciated!

Best answer by Torquelith

I have used Quickbooks Desktop Enterprise for a few years now and just conquered this problem!

 

When you sell the gift card, you are doing it correctly. 

 

To redeem cards and still have tax count correctly:

 

1. Create a product: Go to Items/Services and choose "new". Then under the Type drop menu, choose "discount." Then simply name it gift card or gift certificate. Next, I left description and amount/% blank. 

I left the tax code as "tax" . Under the drop menu for account (to link to) choose your "other current liability" account that you created for the gift cards. It's the account showing unused gift card amount total. Save. 

 

2. Now, on an invoice that is paying with a gift card, (See attached pic for help)

 a. fill in customer

b. First line: choose product(s) and let the selling price show. Make sure it says taxable on the far right end.

c. Next line: as a product choose gift card. Enter the amount of the card they are using. This will pay for the product totally or partially depending on their balance. (this line should show as nontaxable on the far right)

I enter any difference in payment with cash for example under receive payments.

d.  Now, the invoice should show as paid and the tax amount is listed on the bottom showing it was collected. My tax reports therefore remain in order. 

 

I hope this helps!!

 

2 replies

J
JamesM4
October 6, 2021

Hello jstabler,

 

Thanks for taking the time to connect with us here. QuickBooks Desktop offers a variety of tools and resources that help you streamline your work. I'll be happy to answer your question and help steer you in the right direction so you can achieve your QuickBooks goals. 

 

Making sure you're recording your transactions the right way is a good exercise for keeping your books accurate. To ensure accuracy in your books, I recommend contacting an accounting professional to get expert advice on this. Doing this will help prevent any future discrepancies in your books. You can also reach out to accounting professionals on our site using this link here. 

 

I'll also leave this question here so other accounting professional members can chime in and share their expert advice. Let me know if you have other questions, I'm here to help.

 

 

T
TorquelithAnswer
November 3, 2021

I have used Quickbooks Desktop Enterprise for a few years now and just conquered this problem!

 

When you sell the gift card, you are doing it correctly. 

 

To redeem cards and still have tax count correctly:

 

1. Create a product: Go to Items/Services and choose "new". Then under the Type drop menu, choose "discount." Then simply name it gift card or gift certificate. Next, I left description and amount/% blank. 

I left the tax code as "tax" . Under the drop menu for account (to link to) choose your "other current liability" account that you created for the gift cards. It's the account showing unused gift card amount total. Save. 

 

2. Now, on an invoice that is paying with a gift card, (See attached pic for help)

 a. fill in customer

b. First line: choose product(s) and let the selling price show. Make sure it says taxable on the far right end.

c. Next line: as a product choose gift card. Enter the amount of the card they are using. This will pay for the product totally or partially depending on their balance. (this line should show as nontaxable on the far right)

I enter any difference in payment with cash for example under receive payments.

d.  Now, the invoice should show as paid and the tax amount is listed on the bottom showing it was collected. My tax reports therefore remain in order. 

 

I hope this helps!!

 

J
jstablerAuthor
November 4, 2021

Thank you so much for the suggestion! I've been searching for a different way to do this for a long time. I'm not sure why accepted practice to make a negative on an invoice. I feel like a gift card should just be a payment option and we're good! 

 

Anyway, thank you again.

A
Alex M
November 4, 2021

Hi there jstabler,

 

I'm happy to hear that you were able to find your answer on the Community. If you have any other questions, feel free to reach out here.

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