---
title: "Calculating Sales Tax on Credit Memos"
description: "Summary"
canonical_url: "https://support.taxcloud.com/articles/calculating-sales-tax-on-credit-memos-dv4D2UZkQF"
md_url: "https://support.taxcloud.com/articles/calculating-sales-tax-on-credit-memos-dv4D2UZkQF.md"
---
# Calculating Sales Tax on Credit Memos

## Summary

When you need to issue a credit to a customer, it is important to also reverse the associated sales tax. This guide shows how to calculate tax on a Credit Memo so that it is properly recorded as a return in TaxCloud.

[Calculating Sales Tax with TaxCloud Integration in QuickBooks Online.mp4 1444x1052](https://support.taxcloud.com/api/attachments.redirect?id=8ce7fce1-4c27-480c-92ea-e40c9d7df31d&start=222&end=267)

## Step-by-Step Instructions


1. **Create a Credit Memo**: Navigate to **Sales** > **All Sales** > **New Transaction** > **Credit Memo**.
2. **Select Customer**: Choose the customer receiving the credit.
3. **Add Items**: Enter the specific products or services being credited.
4. **Calculate Tax**: Click the **Calculate Tax** button.
5. **Verify Return Status**: The system will calculate the tax amount that should be credited back.

## TaxCloud Impact

* **Recorded as a Return**: Credit Memos are captured as "Returns" in TaxCloud.
* **Liability Reduction**: This transaction will strictly **reduce** your total tax liability for the reporting period, ensuring you do not pay taxes on sales that were reversed.