How to reconcile IO gift cards in QuickBooks

I use QBO and have it integrated with IO and things seem to work pretty well...except I'm confused by Gift Cards.

Customers who have not used their gift cards have a credit balance in their customer profile, which makes sense. But it's when they use the gift card that everything is getting messed up.

I have a customer that received a partial refund via gift card in 2025, then used that gift card in 2026.

While everything lines up and makes sense in IO, the customers QuickBooks profile doesn't tell a clear story. After some editing, I have the 2025 invoice marked as paid with an appropriate credit, the deposit for the payment amount, the 2026 invoice, and two payments for 2026 (one of which is the gift card). However, the client still has an open balance for the amount of the gift card on their profile (because the gift card amount is double-counted: once when originally paid via credit card, and again when paid via gift card).

Their payment is recorded as a new payment and deposited to the default account (even though gift cards don't get "deposited", they should be credited to the gift card liability account, right?). Am I supposed to put in journal entries in QB to

I talked to a QB Live Expert and this is what we worked out, so I'm hoping someone can either confirm this or point me in the right direction.

1. Create a new liabilities general ledger account in QB for "Gift Cards Outstanding" (I categorized mine as a sub account under "Other Current Liabilities")
2. Create an "IO Gift Card" item in QB, and set the income account to the liability account you created in Step 1. (non-inventory item, no price, nontaxable)
3. Create a QB invoice for the client who redeemed the gift card, with just the IO Gift Card item on it for the correct amount. The date for the invoice should be the date the card was purchased.
4. Create a QB journal entry for the date the card was redeemed that credits your undeposited funds account and debits the liability account from Step 1.

If this is a best practice, then I'm happy to share with others. If this isn't the right way to do it, please let me know!

Note: If the gift card wasn't purchased (ie. you gifted it to the customer), don't do anything at all and the balances will all wash out (pretty sure that's not GAAP, but not sure what else would work).