Record a sales tax payment, sales tax refund, or discount on sales tax owed

Record a sales tax payment

To record a sales tax payment, create or categorize the expense transaction on the Transactions page. Click the Category field, then select Sales Tax Payment To Government. The list of sales taxes set up in your business will appear; select the one you are paying and click Save.

If you are paying more than one tax, you can split the transaction and select each tax included in the payment.

Record a sales tax refund

To record a sales tax refund, create or categorize the income transaction on the Transactions page. Click the Category field, then select Sales Tax Refund From Government. Select the tax for which you received a refund in the dropdown list, and click Save.

Record a discount on sales tax owed

If your business is allowed to pay less sales tax than you owe (for example, an early payment discount), you still need to record the full amount as paid, since you don't owe that money anymore. You can accomplish this by splitting your payment transaction to record the full payment and the discount.

  1. Navigate to Accounting > Chart of Accounts, and click the Add a New Account button in the upper right corner. In the Account Type dropdown, scroll down to the Income section, and select Discounts. Name it Sales tax discounts.
  2. Next, head to Accounting > Transactions. Locate or create the payment transaction and open the transaction details. Click Split this withdrawal.
  3. On one of the line items, enter the full amount of the tax due according to the Sales Tax report. Categorize this amount to Sales Tax Payment to Government and choose the sales tax from the list.
  4. On the other line item, enter the amount of the discount. Categorize this to Discounts and Fees, and then choose the “Refund for…” the sales tax discount account you created in step 1.

    Choosing the Discounts and Fees category will flip the sign to negative, so the transaction will balance.

  5. Click Save, and you’re done! The Sales Tax report shows that the tax is paid in full, and the correct payment amount is recorded in your bank account.