Depending on the sales tax rules and requirements for your state, the products and services you sell may or may not be taxable. As you set up each product and service you sell, you must indicate whether the item is taxable or non-taxable. You do this by assigning a sales tax code to each item.
Note: If you've set up your items before setting up sales tax, you'll be prompted to assign taxable or non-taxable status to all of your items after finishing sales tax setup.
Once a sales tax code is assigned to an item, it appears on the sales form (invoice, sales receipt, etc.) next to the item amount. This lets QuickBooks know which items are taxable (and which ones aren't) for that particular sale. If the customer to whom you're selling is also taxable, then QuickBooks calculates the sales tax based on the cost of the taxable items.
You can change the taxable status of an item (or a customer)at any time, even for a specific sales.
Find our more about taxable and non-taxable sales
Find our more about sales tax items and rates
The following procedure assumes you have already set up an item but did not assign a sales tax code to it.
Go to the Lists menu and click Item List.
Double-click the item on the list.
Click the Tax Code drop-down list and choose the appropriate taxable status for the item.
Add a sales tax code
Change sales tax code information
Assign sales tax information to a customer