How To Refund Sales Tax Only with Automated Sales Tax On in QuickBooks Online
For businesses that have to collect sales tax, the automated sales tax in QuickBooks Online can make the process easier. The burden is no longer on the user to figure out if a transaction is taxable and what the correct rate is. When shipping product out of state, I have seen QuickBooks also determine economic nexus for sales tax and automatically calculate and add sales tax for certain states. Nexus refers to states that require sales tax even when shipped in from other states. However, the problem is that the collection of sales tax isn’t usually required unless a threshold is reached, for example, $200,000 or 100,000 transactions in a calendar or other yearly period determined by the state. If sales tax was collected on transactions when technically not required yet, the option is to either refund the sales tax to the customer or set up and pay the state agency.
So, let’s say QBO started collecting sales tax after shipping your product to Massachusetts. How would you go about refunding the amount collected to the customer after they had paid their invoice?
Create A Refund Receipt
Enter the same product and quantity that was on the original invoice and leave as taxable.
Enter the same product with a negative quantity and uncheck the Tax checkbox.
Refund the customer for only the amount of the sales tax.
Go to Sales Tax Settings and turn off (make inactive) the state agency so that tax isn’t collected going forward.
Unfortunately, at this time QuickBooks doesn’t keep track of the thresholds for all the different states. And since this changes constantly, with new states added to the list of those with nexus, it is still up to the business or accountant to keep informed of the requirements and monitor sales for each state for if and when a threshold is met. Of course, this is very complicated and such a huge burden for businesses. Hopefully, QBO will automate this process even further by incorporating the threshold requirements and add new states as necessary, similar to how tax tables and forms are updated continually with payroll.
New Transaction Type in QuickBooks Online
Pay Down Credit Card
There is a new transaction type that was added to QuickBooks Online. It’s called “Pay Down Credit Card” and can be found under the + New quick create button above the navigation bar. This was probably added because one of the Top 10 QuickBooks Mistakes that users make is not using a Transfer for payments between accounts, such as an online payment from a checking account to a credit card account. Instead, users have been adding them from Banking as expenses from the checking account and then adding again as credit card credits for the credit card account. Unfortunately, QBO is not smart enough to recognize these 2 accounts already in QuickBooks and suggest them as a Record Transfer instead of an Add. This causes major problems with duplicate transactions.
This new transaction type is great in helping the user choose the right transaction if entered in QuickBooks before it is downloaded and shows up in the Banking page as a match. Previously, it was not fully recognized as a “credit card payment” and showed as “undefined” when matching to the downloaded transaction, but this has been fixed.
Most users that make online payments to credit cards don’t usually enter this transaction in QuickBooks at the same time. Instead, they are entered via Banking after the fact. And unfortunately, this transaction type is not showing as one of the radio button options next to Add, Find Match, and Record transfer and is still suggested as an Add if the pay down credit card transaction wasn’t used. Therefore, the user still can make the mistake of using Add and duplicating the same transaction in both the checking and credit card accounts.
Hopefully, this functionality will be added soon so that this common mistake in QuickBooks Online will no longer be made. It is also missing from the dropdown list for Transaction type when creating a banking Rule.
Intuit and QuickBooks Online Payroll Reviewed
What I don’t like:
Not US-based support. This wasn’t always the case. Years ago when I had any questions, I would get someone in the US for support. Now, when you call, you get someone in the Philippines. They are very cordial, but I don’t think they fully understand all the IRS rules (much less for any state) for payroll.
Long Wait Times. It’s very hard finding a number to call and when you do find it, plan on being on hold for what could turn into over an hour (including being put on hold after getting an agent). I have tried their Chat option, but that seems to take forever, as if each agent is chatting with multiple people at once. I kept having to ask if they are still there while I wait for an answer or resolution.
Glitchy. On more than one occasion was I not reminded of a tax payment due or form due. The excuse that I always got was that it was a “glitch” in their system. And don’t expect any compensation for any penalties or fees due to their error.
Having to Do It Yourself. The responsibility is always on the business owner for correct withholdings, even when using a payroll service. Therefore, if something isn’t set up correctly, errors will occur. I have seen the tax tracking type 401k used for 401k loan repayments by more than one client. Of course, this is wrong for these deductions to be pre-tax. I don’t necessary blame my clients since the software shouldn’t expect anyone to guess to use “Other deduction” as the tax type instead and use loan repayment.
Corruption. Not a good thing when running a Payroll Checkup in QuickBooks Desktop Enhanced Payroll and it creates liability adjustments that don’t affect the liability account(s). This has caused the 941 to be wrong quarter after quarter until fixed. I was told by support that they have seen issues like this when running payroll checkup, so it is not recommended.
Multiple Price Increases, No Improvements. The software (Intuit Online Payroll) looks outdated and hasn’t been changed graphically or functionally. It doesn’t make sense to increase prices when the core payroll product has not been updated or improved and the support has gone down. Adding new tiers for auto payroll, HR support, and a tax penalty fee guarantee seem like improvements, but the fact that the following link doesn’t even work, is a bad sign (just a more expensive bandaid on a lacking core product):
Not So Elite, Not So Automatic. Even at this highest and most expensive tier, the user is still responsible for making garnishment payments to the appropriate entities. With my current payroll service, the deduction is paid automatically to the agency, depending on which states offer this capability.
I have been very happy with my current payroll platform and so have my clients!
Since I already provide my own value-added full service payroll and for the reasons stated above, I can only support QuickBooks payroll and related products on a limited basis.