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TXFlipo
March 10, 2025
Question

Help! I did not use the QuickBooks Online Tax Center to Record State Tax Payments

  • March 10, 2025
  • 1 reply
  • 0 views

I use QuickBooks Online (QBO). Be forewarned, I have NO accounting background other than my experience with QBO, Google searches, and YouTube videos.  I have only recently achieved a slight understanding of Debits and Credits (thanks to YouTube).  My tax entries on all of my rental income invoices are automatically recorded into my Tax Center and are located in liability account named  "State of Texas Accounts Payable  in my Chart of Accounts.  When I originally set up the Auto Tax feature in QuickBooks Online I did not understand how it was supposed to work.  I did not know I was supposed to use the Tax Center to record PAYMENT  of those taxes.  Instead, I set up an expense account for the State under the "Taxes Paid" category and recorded each tax payment as an expense.  Now, three years later, I have a large Accounts Payable balance on my balance sheet.  So, I HAVE paid ALL of the taxes owed but the Tax Center and my balance sheet shows they have NOT been paid. My balance in the Tax Center and balance sheet needs to be zero. I have so many questions about how to make that happen and I am deathly afraid of screwing up my books. I need the Community's help in fixing this problem. Here are my questions and concerns:

A. Can I delete every tax payment expense I made for the last three years, and then go into the Tax Center and record them as paid?

B. Will the Tax Center then automatically make the proper expense entries in QBO? 

C. When I do the deletions, I assume my checking account balance would increase incrementally with the deletion of each tax expense and then would return back to its original value after I record all the tax payments through the Tax Center? 

D. FYI, I previously tried to change the category of the tax expense payments to the State Tax payable account but QBO would not allow it. I got an error message. 

E. What about the auto-tax connection to my invoices? 

F.  Would I first have to delete all my invoices, and that would automatically remove the tax entries from the Tax Center?  In other words, after deleting all my invoices, would the Tax Center then show there is no tax to be paid?

G. All the invoices are marked as paid. Do they have to be changed to unpaid before I'm allowed to delete them? Will I be allowed to delete them? 

H. What ever needs to be done to correct the issue, the bottom line is the values in all my accounts need to be the same after the fix as they were before the fix. With the obvious exception of the State Tax Payable account. 

H. This whole thing is so convoluted and interconnected it makes my head spin. I hope the QuickBooks Community has an answer.  There HAS to be a solution to this problem. HELP!

 

1 reply

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CarlSJ
March 10, 2025

I deeply appreciate your hard work seeking guidance and solutions through Google searches, YouTube, and engaging with the Community, @TXFlipo. I understand that you're in the process of learning the features of QuickBooks accounting, and facing challenges is part of that journey. Yet, I'm here to assist you as you deserve support from the Community. Let’s go through your questions one at a time to help you get everything organized.

 

To begin with, yes, we can delete all tax payments made outside the Tax Center as the problem occurs when you create an expense account instead of using the appropriate way. After deleting them, let's record them properly in the Tax Center and mark them as paid.

 

Second, the Tax Center does not automatically create proper expense entries in QBO. That's why you'll need to record each tax payment in the Tax Center from the oldest to the newest.

 

The third is yes, when you delete the tax payment expenses, your account balance will increase by the amount of each deleted expense. After you record the payments through the Tax Center, your account balance will decrease by the total amount of the tax payments you record.

 

Fourth, the error message is expected as it's not the right process. You just need to delete the tax payments or expenses and record them correctly through the Tax Center.

 

Fifth, there's nothing to worry about the auto-tax connection feature as it will continue to work as long as tax payment records are corrected.

 

The Sixth and seventh options could complicate your records further, it's better to avoid touching invoices and invoice payments. You should focus on correcting the tax payments.

 

Lastly, values in all of your accounts must align perfectly after we have deleted any inaccuracies and made the necessary corrections through the Tax Center. This process ensures that the tax payments is accurate and reliable.

 

Additionally, consider consulting with a certified accountant or accounting professional. They can provide personalized assistance and ensure that your books are accurate.

 

Moreover, QBO simplifies taxes with Automated Sales Tax Envelopes. Envelopes help you save for emergencies or to get ahead financially.

 

If you’re eager to explore the details of QuickBooks reports and enhance your comprehension of your financial situation, think about reaching out to our QuickBooks Live Expert Assisted team. Our knowledgeable experts are ready to provide personalized guidance that is tailored specifically to your unique requirements, ensuring you receive the support you need to make informed financial decisions.

 

Taking it step by step will help you correct the problem. Also, always remember that the Community is always here to help you whenever you need it. Feel free to come back if there's anything we can assist you. Have a productive day.

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TXFlipoAuthor
March 10, 2025

CarlSJ, Thanks so much for the quick response. I have a couple of follow up questions. 

A. You stated "Second, the Tax Center does not automatically create proper expense entries in QBO. That's why you'll need to record each tax payment in the Tax Center from the oldest to the newest." So are you saying when I do record each tax payment in the Tax Center, a proper expense WILL be created In QBO? 

B. If the answer is YES, where will it be created? Which account in my Chart of Accounts will I find that expense record?

I'm sure I'll have additional questions as I sort through this issue.  Thanks again!

R
RoseJillB
March 10, 2025

Hi there, @TXFlipo.

 

I appreciate you getting back to me for clarification and ensuring that you will be recording your tax payments correctly in QuickBooks Online (QBO). Let me share the information you need for a better understanding of how QuickBooks works with sales taxes.

 

When the sales tax is taken from your customer's invoice, it will be posted or debited to your Sales Tax Payable and increase your Sales Tax Liability. Therefore, no expense entries will be created in this action, as taxes taken out from the sales transactions aren't considered expenses.

 

Right after you pay your sales taxes correctly in the Sales Tax Center, this will debit your Bank and credit your Sales Tax Payable and your Sales Tax Liability account. To see these entries, you can view the mentioned accounts above.

 

Moreover, you can refer to this article specifically to Record a sales tax payment section to correct your book: Manage sales tax payments in QuickBooks Online.

 

Also, I'd still recommend consulting a professional tax advisor to guide you along the process.

 

Furthermore, learn how to set up an email schedule for your memorized reports in QuickBooks Online: Set schedule and email information for a memorized report in QuickBooks Online.

 

Please don't hesitate to reach out if you have further questions managing your taxes, @TXFlipo. I'm here to assist you round the clock with any assistance you may require.

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