Hello accounting147,
I'm excited to have you join us in the QuickBooks Online community! It's a great place to find answers to your product and how-to questions. I can help you with recording an expense that includes tax.
QuickBooks Online keeps things simple when it comes to the expense and sales tax features. First, I want to make sure you have sales tax configured in your account. Here's how it's done.
- Select Taxes in the left menu.
- Click Set up sales tax.
- Choose a Province or territory from the drop-down to get started (Note: You can set up more provinces and territories later).
- Click Save.
- Set up the Tax Agency settings.
- Click Next.
- Click Got it to finish.
Follow the steps outlined in the following article to set up other taxes if needed: How to set up a new sales tax code
Now that that's turned on, let's go create the expense with tax included.
- Click the Plus (+) icon.
- Select Expense.
- Fill in the Payee, Payment account, and other details.
- To indicate the tax is already calculated in the total of the amount being entered, choose Inclusive of Tax in the Amounts are drop-down.
- Enter the total with tax in the Amount column.
- Or, to indicate the amount being entered is before tax, choose Exclusive of Tax from the drop-down.
- Enter the total before tax in the Amount column.
- In both instances, choose the appropriate code from the Sales Tax column drop-down.
- Click Save and close when complete.
Here are a couple of screenshots so you can see the difference between the inclusive and exclusive of tax options.
Inclusive of Tax — Note the amount in the Amount column, Subtotal, and Total are each the same
Exclusive of Tax — Note the amounts of the Amount and Subtotal have the same, before-tax figure, then the Total displays the total with tax
I hope that helps! Have a great day.