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Tracking use tax in QuickBooks
- 1. TRACKING USE TAX IN QUICKBOOKS Tips and tools for tracking use tax in QuickBooks. By Jo Tsai Cherniss
- 2. What is use tax? When you make a retail purchase, Use tax is a tax on the you usually pay sales tax to the use of goods or seller, who in turn pays it to the State. However, there are instances certain services in when sales tax is not paid on most States, when purchases, and in many of these situations, use tax is due. State sales tax has For example, State of California not been paid. states that “the use, storage, or other consumption of those same kinds of items in California .” There is no one rule that applies to all states, so be sure you are familiar with the rules in your particular State (contact your state’s Department of Revenue).
- 3. Step 1: Prepare Create an account titled “Use Tax Payable” Thisis an Other Current Liability Account in QuickBooks.
- 4. Step 2: Record Enter the Purchase with the sales tax calculated, then deduct the sales tax and record it under “Sales Tax Payable.”
- 5. Step 3: Generate/Review Report
- 6. Step 4: Adjust Taxes Due 1. Enter the Adjustment 1 Date 2. Enter Sales Tax Vendor 2 (the government agency 3 that collects sales tax). 4 3. Assign Use Tax Payable 5 in the Adjustment Account 4. Increase Sales Tax 5. Enter increase amount
- 7. Step 5: Make Payment Go to Vendors>Pay Sales Tax>Manage Sales Tax Click Pay Sales Tax button
- 8. Bonus: Tracking Tax Credit EXAMPLE for State of Five Step Process California Step 1: Prepare = Tax at Source Step 2: Enter as it happens = Tax District & Price in Step 3: Generate report Memo Step 4: Adjust tax payment = Sort by Memo Step 5: Render payment = Decrease Taxes Owed The five steps process may also be used to track tax credits in QuickBooks.
- 9. Resources: State Departments of Revenue Links to State Departments of Revenue California Florida Kentucky Montana Ohio Utah Alabama Georgia Louisiana Nebraska Oklahoma Vermont Alaska Guam Maine Nevada Oregon Virginia New Arizona Hawaii Maryland Pennsylvania Washington Hampshire Massachusett Arkansas Idaho New Jersey Rhode Island West Virginia s South Colorado Illinois Michigan New Mexico Wisconsin Carolina Connecticut Indiana Minnesota New York South Dakota Wyoming North Delaware Iowa Mississippi Tennessee Carolina District of Columbia Kansas Missouri North Dakota Texas (Washington DC)
- 10. THANK YOU myquickbookkeeper.com 424.229.2719 westwood | manhattan beach jo@myquickbookkeeper.com Tracking Use Tax in QuickBooks. 2011 Jo Tsai Cherniss. All Rights Reserved.