Establishing Tax Status of Inventory Items

It's not unusual to prepare an invoice that includes both taxable and non-taxable items. For example, your invoice might be for services and inventory items. The inventory items might be taxable, but the services might not be subject to sales tax in your state. You certainly don't want to create two separate invoices for the taxable and non-taxable items. QuickBooks lets you specify what is taxable and what is not.

Select Lists, Item List from the menu.

Click an item for which you want to identify the tax status.

Press Ctrl+E to edit the item.

Set the Tax Code to Tax or Non depending on the tax status of the item.

Click OK.

Repeat this for all the items to which you want to assign tax status.

Press Esc to close the Item List when you are finished.

Did You Know?

You can assign the tax status of an item right on an invoice. When you look at an invoice form, you'll notice a tax column to the right of the items. You can make entries in this column or verify or change entries that already appear here.