How to enter use tax adjustment as COGS (not expense) when trying to record sales tax payment?

Hello there, Christa8.
 

QuickBooks Online (QBO) automatically categorizes sales tax adjustments as expenses and does not allow direct classification as Cost of Goods Sold (COGS). However, as workaround, you can create a journal entry or adjusting transactions to record use tax adjustments under COGS.
 

Here's how to enter the use tax adjustment as COGS when recording a sales tax payment.

1. Set up a Use Tax Payable liability account.
2. Create a COGS account for the Use Tax.
3. Record the use tax accrual by creating a journal entry using the accounts you created.
   
4. Record the use tax payment.
   • Go to +Create, then select Check or Expense.
   • Enter your State Tax Authority for Payee.
   • For the account, select the liability account you've created.
   • Enter the amount of the use tax payment.

Since a use tax adjustment can affect your financial reports, I recommend consulting an accountant to ensure it is handled correctly and complies with accounting standards.

Additionally, need help managing your books? Our QuickBooks Live Expert Assisted team has your back. We have dedicated bookkeepers who assist you with streamlining your accounting processes.

Please don't hesitate to let us know if you have any further questions or need additional assistance. We're here to help.