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R
renata_hauff
December 17, 2018
Question

Sales Tax when sale happens out of state

  • December 17, 2018
  • 1 reply
  • 0 views
QBO sales tax calculator gives us 2 options if you ship or not goods sold.
If you don't ship, Sales Tax will be calculated based on where the sales took place. What happens when sale did not take place in the state the company is based on? I don't see an option to make a choice.Thank you!

1 reply

Rose-A
Rose-A
December 18, 2018

A warm welcome to the Community, renata_hauff.

Allow me to provide a little information about how sales tax is calculated in QuickBooks Online.

 

Each state has its own definition of what is taxable and what is not, so you will have to research each state sales tax page to find out what the situation is in that state. The new sales tax feature in QuickBooks Online looks at a variety of information to calculate your sales tax:

 

  • The state where you have nexus and are registered to collect sales tax.
  • The physical address of your business.
  • The physical address on the sales receipt or invoice.

The first issue is the state your company set up in. You will need to register with the state for a sales tax permit and figure out what instate sales are taxable. Is sales tax reporting in your state on an accrual or cash basis, and the state will set the frequency of filing/paying sales tax. However, I'd suggest consulting an accountant to help and guide you better.

 

Here are some recommended articles for more information about setting up sales tax:

 

If you require more information about sales tax, feel free to leave a reply below. Have a nice day.

B
BPK
August 26, 2019

I have out of state sales but QB is charging sales tax anyway. How do I stop that? I have 0.0% but no tax agency selected. I didn't know this was going on.

Kristine Mae
Kristine Mae
August 26, 2019

It could be the item/service is taxable, BPK. This is why it's calculating taxes.

 

If the out of state customer shouldn't have sales tax, you can uncheck the TAX box in the sales transaction (refer to the screenshot below).

 

 

You can also change the customer's setup to tax-exempt. This way, they won't be charged sales tax automatically. Here's how:

  1. Click Sales, then go to the Customers tab.
  2. Select the customer to open their profile.
  3. Click Edit.
  4. Go to the Tax info tab.
  5. Put a check mark in the This customer is tax exempt box.
  6. Select a reason for exemption, then click Save. 

If anything arises, please don't hesitate to drop a comment below. 

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