Understanding California Prepayments

If you file California sales tax returns quarterly, you need to make monthly prepayments for the first two months of each quarter. This article explains how prepayments work and how they're applied to your quarterly filing.

What Are California Sales Tax Prepayments?

California requires businesses filing quarterly sales tax returns to make prepayments for the first two months of each quarter. These are estimated payments based on your expected tax liability for those months.

When you file your quarterly return, Kintsugi calculates your total sales tax for the entire quarter. The prepayments you made for the first two months are then deducted from this total, and you only pay the remaining balance for the third month.

Prepayment Requirements

California has specific rules for calculating prepayments depending on the quarter:

First, Third, and Fourth Quarters

For each of the first two months in these quarters, your prepayment must be either:

• At least 90% of the tax liability for that month, or

• ⅓ of the prior year's quarterly liability for that same quarter, multiplied by the current tax rate (if you were in business during that quarter)

Second Quarter (April through June)

The second quarter has special rules:

• First prepayment (April): Must be at least 90% of April's liability or ⅓ of the prior year's Q2 liability, multiplied by the current tax rate

• Second prepayment (May 1 through June 15): Must be at least 90% of May plus 90% of the first 15 days of June, or 135% of May's liability, or ½ of the prior year's Q2 liability, multiplied by the current tax rate

Payment Schedule

Quarterly Filers

Monthly Filers

How Kintsugi Handles Your Prepayments

Kintsugi automatically manages your California prepayments to ensure accurate filings and payments:

1. First two months: Kintsugi remits your prepayments based on approved monthly data

2. Quarterly filing: Once all three months of data are approved, Kintsugi prepares your quarterly return

3. Automatic adjustment: Kintsugi deducts the prepayments already made and remits only the remaining balance for the third month

You don't need to take any additional action. The system calculates the net tax due and processes payment automatically after your quarterly data is approved.

Understanding Your Quarterly Filing Report

Your quarterly filing report in Kintsugi shows the prepayments as adjustments. The California Department of Tax and Fee Administration (CDTFA) applies these credits when you file your return, so you only pay the remaining balance.

If you're a new customer and we've imported your registration data, Kintsugi can reference your past prepayment history to ensure accurate calculations moving forward.

What happens if you miss a prepayment in California?

Missing a required prepayment can lead to penalties and interest charges. If you think you may be unable to make a payment on time, it’s best to reach out to our team right away so we can review your situation and discuss possible options.

Key Takeaways

• California quarterly filers make two monthly prepayments before submitting their quarterly return.

• Kintsugi automatically deducts these prepayments from your total quarterly tax liability.

• You only pay the remaining balance for the last month of the quarter.

• No approval is needed from you. The system handles everything once your monthly data is approved.

Tip: You can verify your applied prepayments and view your remaining balance by logging in to your CDTFA account and reviewing your payment history under "Prepayments." You can find more details in the CDTFA’s prepayment schedule.