How to Set Up Taxable Customers and Items in QuickBooks

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In Brief...

In order for QuickBooks to accurately track sales tax, you need to indicate which items are taxable and which customers must pay sales tax. You can indicate that a customer is taxable when you add the customer to QuickBooks or you can edit the setting later in the customer record.

This feature works the same in versions 2011–2016 of QuickBooks.

Instructions

To indicate that an existing customer is taxable:

  1. From the Home page, click Customers to open the Customer Center.
    Customer Center

  2. In the Customer Center window, on the Customers & Jobs tab, highlight the customer name.

  3. In the Customer Information section, click Edit Customer.
    Customer Information Section

  4. In the Edit Customers window, select the Additional Info tab.

  5. From the Tax Code drop-down list, select "Tax".

  6. From the Tax Item drop-down list, select the applicable sales tax item.
    Additional Info Tab

  7. Click OK.

To indicate that an item is taxable:

  1. From the menu, select Lists > Item List.

  2. In the Item List window, double-click an item you need to mark as taxable.

  3. From the Tax Code drop-down list, select "Tax". Click OK.
    Edit Item Dialog Box

If an item is flagged as taxable, QuickBooks applies tax to the item when it is selected on sales forms. QuickBooks automatically applies the sales tax percentage based on the default sales tax item from your sales tax preferences.

Author: Lee Fifield

Lee is a writer, editor, and technology evangelist. Lee received her undergraduate degree in Communications from Ithaca College.

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