Top 5 - Paying Taxes

Hello QuickBooks Community! We are back with more trending questions and answers. This time around, we will be sharing more top questions asked on the topic of paying taxes. We will specifically dive into questions pertaining to correcting state tax credit, deleting and recreating a sales tax payment, removing a state that you don't pay taxes to, & more. 

If these are topics you're curious about, make sure to keep on reading.

1. How can I correct the state tax credit for unemployment taxes? 

Great question!

To correct this you can take these steps on what to do when a taxing agency withholds a portion of the refund for a separate balance due:

1. Go to the Employees menu and select Payroll Taxes and Liabilities. Then, click Deposit Refund Liabilities.
2. Click the name of the vendor who submitted the refund check.
3. From the Refund Date field, enter the deposit date and then, input the first day of the pay period that the refund affects in the For Period Beginning section.
4. Choose how you want QuickBooks to handle the deposit.
5. From the Taxes and Liabilities section, select the payroll item/s affected by the refund and enter the positive amount. Then, click OK.
6. If you're using Basic, Standard, or Enhanced Payroll for the US. Or the payroll offering for Canada, the process is complete.
7. If you have Assisted Payroll, proceed to step 11 of this article for the next step: Record a payroll liability refund check.
8. Make sure to enter the full amount of the tax refund in the Deposit total field.
9. Then, to account for the portion that was withheld, enter a Liability Adjustment to reduce the liability.

For more info on this process, make sure to check out this link: Record a payroll liability refund check.

Also, it's recommended to create a backup copy first before making any changes to your company file. This is to ensure you have the original details that you can restore at any time in case of data loss or damage.

That should do it!

2. How do I turn off “Based on location” sales tax feature?

QuickBooks Online calculates sales tax based on location using the criteria below:

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

This is the reason why it is impossible to turn off the Based on Location tax feature. It is performing as intended. You'll have the option to set up a custom rate as an alternative if the third-party program doesn't have this default function.

Here's how:

1. Open the Taxes menu.
2. Click on Sales tax settings.
3. From the Custom rates section, choose Add rate.
4. Click on Single or Combined.

Once done, you can manually select the tax rates from the Based on location dropdown on the invoices created from the other system. Feel free to visit this link for more details: Use custom rates to manually calculate taxes on invoices or receipts in QuickBooks Online.

I'm also including the following useful guides to assist you to keep track of and manage your reports in QBO:

• Run reports in QuickBooks Online
• Customize reports in QuickBooks Online

3. How do I delete a Sales tax payment and recreate it in QuickBooks Desktop? 
Yes, you can delete the sales tax payments from QuickBooks Desktop. There are two ways to do this and I'm happy to show you the process for each one. 

The first method is to go to the vendor's profile (in charge of collecting your sales taxes) and delete the tax payments from there. Here's how: 

1. Go to Vendors, then select Vendor Center. 
2. Locate the vendor that collects your sales taxes.
3. Under the Transactions tab, find and open the Sales Tax Payment transaction.
4. Click Delete.
5. On the confirmation window, click OK. 

The second method is to go to your Chart of Accounts and open the bank register where you paid the taxes from. Here's how: 

1. Go to Lists, then select Chart of Accounts.
2. Find and open the bank register (where you paid the sales taxes from). 
3. Locate and open the TAXPMT Type. 
4. Click Delete.
5. On the confirmation window, click OK. 

We have an article series about handling Sales Taxes in QuickBooks Desktop. Check it out if you need a bit of help managing your sales taxes, especially the adjustments: Set up sales tax in QuickBooks Desktop. 

Also, you might want to reach out to an accountant if you want to delete the tax payments in a closed accounting period. Doing this will affect your books, and they have an idea on how to handle the corrections. 

You're welcome to browse other QuickBooks Desktop articles in our articles list page. I'm sure they'll help you record new transactions, run reports or even handle tax corrections. 

4. How do I remove a state that I do not pay taxes to? 
Great question, I'll yield some knowledge about states in QuickBooks Online (QBO).

Yes, you can remove the state by inactivating it by going to the Payroll Settings. But before doing that, make sure that no active employees are currently assigned to the work location. Once confirmed, please follow the steps below. 

1. Go to the Gear icon, then choose Payroll Settings.
2. Under Company and Account, click Work Locations.
3. Select the exact state, then mark the Inactive checkbox.
4. Hit Save.

I've attached great articles that you can check out about archiving forms, managing taxes, and other relevant topics. 

• Archive old forms
• Taxes
• About multistate employment payroll situations

5. All of my income is reported in QuickBooks, how do I avoid paying taxes on 1099-MISC twice?
I got you covered!

For your 1099, you'll need to tag those transactions as Personal income to avoid being taxed twice. For your W-2, you'll need to record it in your tax profile so the system will not triple-calculate the taxes.

You’ll also want to make sure you've categorized all the transactions correctly and recorded those on your Tax profile.

To know more about this process, I'm leaving you some articles to help guide you in filing 1099 and W-2 in QuickBooks Self-Employed:

• How to file taxes when you have both 1099 and W-2 income in QuickBooks Self-Employed.
• Who needs to pay estimated taxes?

That should do it!

That’s all we have for today! I hope you got some new helpful information out of these questions and feel more confident when it comes to paying taxes. If you have any other questions, please let us know here in the community and we’re happy to help get those taken care of.