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circletax1
January 30, 2024
Question

Sales Tax Not Calculating Correctly on mark up

  • January 30, 2024
  • 4 replies
  • 0 views

Can someone please tell me why I have things checked as taxable and it's like qbo thinks it knows better than I do as to what is taxable.  And then if it's going to only tax certain amounts on my invoice why doesn't my report at least reflect these numbers.  We use POs and mark ups.  Hopefully the screen shots appear....here is the way the invoice was put in...Everything has the green check by it saying it's taxable.  The sales tax rate is 8.975 (4.225 + 1.375 + 3.25 + 0.125).  So based on the boxes I checked as taxable it should be $492.56.  However based on the tax that is calculated the only things that are being tax is the $2375 & the 1598.40 (the markup isn't taxed and neither is the shipping/markup).  However if you look at the report it is showing taxable amount is $4649.33 (which would include the products plus the markup...only the shipping is showing as exempt).  Please tell me how to fix this or why is it doing it like this?

    4 replies

    JenoP
    JenoP
    January 30, 2024

    Thank you for sending the screenshot, circletax1. I appreciate you providing that visual so we can better understand your concern with the sales tax calculation.

     

    To summarize, QuickBooks Online calculates sales tax for each transaction based on the following parameters:

     

    • The customer's tax exemption status
    • The shipping and selling locations
    • The type of product or service sold

     

    If everything is set up correctly, the markup item is automatically taxable.

     

    To get more insight into why the sales tax is showing as $356.61 for this invoice, click the See the math link under the sales tax amount. This will break down the full calculation including the agency tax rates and the taxable amount. 

     

    On the same window, you will see a separate line for markup and its sales tax amount. It will also give you the option to override the sales tax amount. 

     

     

    Let me share these articles with more information on how QuickBooks Online calculates and handles sales tax:

     

     

    I'd be on the lookout in case you have follow-up questions, circletax1. You can also visit us again anytime you need anything when recording sales and other transactions. I'd be happy to help or point you toward useful resources related to QuickBooks Online.

    C
    circletax1Author
    January 30, 2024

    I know where the calculations are coming from my question is why is it only calculating on what it thinks is taxable and how do I fix it.  When I check the little box that say taxable I need it calculating sales tax on that amount, not on the amounts it wants to charge tax on.

      C
      Carneil_C
      January 30, 2024

      Thanks for your reply, @circletax1.

       

      I'll add some details and route you in the right direction for support to help you sort out this issue with the sales tax calculation in QuickBooks Online.

       

      As provided by my colleague above, there are different scenarios where the system will base its calculation. That said, you'll want to double-check to ensure that the sales tax setup is accurate for taxable customers and the product. This way, QuickBooks will calculate it accurately.

       

      Once verified that it's correct but the issue still persists, I recommend reaching out to our QuickBooks Online Support Team so they can further investigate what's causing this problem. They can also guide you on a possible fix. Here's how:

       

      1. From the Search tab, click Contact Us.
      2. Enter your question and select Continue.
      3. Review and select from the following: Have us call you, or Chat with us.

       

      Moreover, I'll be adding these articles again where you can read more insights about how sales taxes work in QBO:

       

       

      You can get back to this post if you have other concerns or follow-up questions about handling sales taxes. I'll be around to provide further assistance.

      D
      DP77
      March 15, 2024

      Is your item a bundle by any chance?    I'm having an issue where it doesn't increase the tax if you change the quantity on the bundle.  At forst I didn't realize what was going on and why my sales tax filing was always incorrect.   It's been a nightmare. I've paid a ton of penalties for being late trying to figure out where things went wrong.

       

      Anyway, I wouldn't expect any decent response on here.  The QB team will not be of any help to you.  

      P
      PNWDesigner
      May 18, 2024

      I thought about going on LinkedIn and contacting as many intuit engineers as I could to work around the customer support system they have in place that prevents this important issue from getting elevated to a place it could be fixed. I didn’t bother because I dropped quickbooks, but maybe that’s work a shot?

      J
      joshbrown
      December 11, 2024

      This issue is partly resolved for me.

      It now calculates the sales tax correctly, but only if I add the billable expense (unbilled income) in a specific way. Let me explain, as there are two ways I typically add those to an invoice. One will work correctly and the other will not. I am unsure as to why it doesn't work both ways.

      Hopefully Intuit can remedy the situation further so that it always works correctly.

       

      Scenario #1:

      Create a New Invoice using a blank invoice and then add the customer name. This will then give a list of suggested items to add to the invoice from the unbilled income (billable expenses) attached to that customer.

      When you add these to the invoice they will work exactly as expected, and the sales tax will calculate accurately for both the product line item and the markup line item (which is a hidden item from the customer).

       

      Scenario #2:

      Starting from the list of unbilled income select "Create Invoice" from an unbilled income product/service.

      This will then start a new invoice and automatically fill in the customer information. It will also give you the option of adding other "suggested items" to the invoice. However, the tax will be calculated incorrectly for the line item that you added initially, but all of the additional added from within the invoice will be calculated correctly.

       

      So, in conclusion this issue is almost resolved.

      I would like to have more peace of mind that when I add items to an invoice that the math is working correctly.

      Simple math like tax percentage should not be something that is failing. I understand that the tax portion is not as simple as the math, but when I have marked it as taxable and I even had changed it to not use the Automatic Calculation and it still wasn't doing the math correctly, there is a major issue. Especially as Intuit and Quickbooks Online pushes the users to utilize more "Automated" tasks taking the user out of the responsibility of entering and verifying everything prior to sending invoices, payments, etc. and asks us the users to trust that it is doing the job correctly.

        A
        AnaRose_Q
        December 11, 2024

        We know the importance of accuracy in every detail and calculation, Josh. Please be assured that our committed team is attentively working on it to address the situation straight away.

        If you're dealing with sales tax for your products or services, you don't need to worry about determining each tax rate on your own. Our software simplifies this process seamlessly. Allow me to explain how it works.

        QuickBooks Online calculates sales tax based on the following criteria:

         

        • Your customer's tax-exempt status
        • Where you sell and where you ship
        • What you sell

         

        To enhance your understanding and receive better guidance, I recommend reaching out to your accountant, as they possess greater expertise in this area and can offer a more effective solution.

         

        If the issue persists, I suggest reaching out to our Live Support team. They have the necessary tools to diagnose the problem and can also provide a screen-sharing session for a deeper investigation.

         

        For complete guidance on how QuickBooks Online calculates sales tax, you can refer to this link: Learn how QuickBooks Online calculates sales tax.

         

        As for reference on how to automatically set up sales tax, check out this article: Set up and use automated sales tax in QuickBooks Online.

         

        I value the time you've spent through the process, please know that we can always assist you at your convenient time.

        J
        joshbrown
        December 11, 2024

        That is not the issue here. Obviously AnaRose_Q is either a Bot or did not read my response to the issue that has been on going.

        It is exactly these types of replies from the "Quickbooks Team" that are unhelpful, and to be honest downright unintelligent about their own product, how it works, and the issues that the users are facing.

        As not only a user, but a reseller of the product, I would like to be using the community forum for solving problems and assisting the user base with real answers or at least pushing the issues to the Intuit developers/software engineers who can remedy the situation.

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