Mark customers as taxable or tax-exempt

If you charge sales tax, you might have some customers that are exempt from paying sales tax. A setting in each customer's record helps you keep track of this.

To mark a customer as taxable:

1. In the navigation bar, click Customers (or Invoicing > Customers, or Sales > Customers depending on what you see).
2. Select the taxable customer.
3. Click Edit Profile in the customer record.
4. Click the Tax Info tab in the bottom half of the Customer Information window.
5. Click the checkbox to make the customer taxable.

Now when you create a sales form for that customer, you can select which tax rate to apply.

If a customer is tax-exempt, don't check this setting. Some tax-exempt customers have a resale number. You can enter it here, if you have one for the customer.

Mark all new customers as taxable

If you charge sales tax to most of your customers, you can set up QuickBooks so that all new customers are taxable.

1. In the Sales Tax Center, select Edit sales tax settings in Related Tasks to the right.
2. Select whether to make all new customers taxable.
3. Click Save.

Customers and tax rates

If you set a default tax rate, and make your customers taxable, QuickBooks automatically selects the default rate for you on sales forms. You can select a different rate for a customer from the Sales Tax dropdown on the form. The next time you create a transaction for that customer, QuickBooks remembers the last rate you used and selects it for you.

View taxable customers

A quick way to see your taxable customers is to run the Customer Contact List report. You can do this from Related Tasks in the Sales Tax Center and customize it as needed. The report includes the Taxable field status and the taxable rate.