I have issued a credit note to a customer for the tax portion of his invoice. It shows as unapplied credit. I have refunded him. How do I apply this?

You can associate the customer's refund with the unapplied credit, enquiries17. Let me guide you through this process.

If you haven't yet, record the refund by following these steps:

1. Click the + New button and choose Expense or Cheque.
2. Select the customer name in the Payee field.
3. Go to the drop-down list for Payment account ▼, then select the correct bank account.
4. On the first line of the Category column, choose Accounts Receivable.
5. Enter how much you want to refund in the Amount field.
6. Fill out the other fields as you see fit, then click Save and close.

After that, follow these steps to link the refund to the customer's credit:

1. Go back to the + New button and click Receive payment.
2. Select the name of the customer and fill out the other fields as you see fit.
3. In the Outstanding Transaction section, select the checkbox for the Expense or Cheque you created when recording the refund.
4. Make sure the payment is equal to the open balance, then click Save and close.

You can also read more details about this process here: Record a customer refund in QuickBooks Online.

Let me also share these articles for additional guidance when managing credits in QBO:

• How to refund a deposit and close an invoice
• Apply a journal entry credit to an invoice in QuickBooks Online

Feel free to reach out with any additional questions or concerns about refunds, customer-related transactions, or any other features in QuickBooks Online. We're always ready to provide guidance and support.