What Is a Sales Tax Item and How Should I Use One?

A sales tax item is a special type of Item, the list of goods and services that you sell.  It is used to specify the sales tax rate and the tax authority collecting it that will be charged on each invoice.

See our article on all of the Item types supported by QuickBooks for more information.

Sales tax items can be grouped into another special type of item, a sales tax group, to combine multiple sales tax items on a single invoice.

You should create 1 sales tax item for each tax authority for which you collect tax.

Sales tax items are maintained on the Lists->Items menu.  There is a secondary method to maintain sales tax items by visiting the Edit->Preferences menu and choosing the Add sales tax item… button on the Company Preferences tab of the Sales Tax submenu.

Primary Method to Maintain Sales Tax Items

Secondary Method to Maintain Sales Tax Items

You can specify the default sales tax item for new customers in the Preferences window.  To do so, use the pull down on the Your most common sales tax item selection.

When you add or edit a customer, you can use a sales tax item to specify that customer’s default tax rate.  The sales tax item is on the Additional Info tab in the New and Edit Customer windows.

When an invoice is created in the Create Invoices window, the sales tax item can be entered for the overall invoice.  This value defaults to the sales tax item for that customer, but it can be changed for this invoice only.  For example, this capability could be used to apply a different tax rate on a single invoice for a shipment to a location different from the normal location of a taxable customer.

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