FTB corrects June 15 passthrough entity elective tax prepayment calculation FAQ


Today the FTB corrected its web page to reflect that the June 15 prepayment calculation is based on the greater of:

Previously, the first bullet on the FTB’s web page stated that the prepayment was based on 50% of the elective tax paid in the prior taxable year.

The amount “paid for” is determined based on the passthrough entity elective tax liability shown on the 2021 tax return. For example, if a partnership paid $8,000 of passthrough entity elective tax for 2021 on December 31, 2021, but its passthrough entity elective tax actually ended up being $12,000 as reflected on its 2021 return, then the entity must pay $6,000 (50% of $12,000) on June 15 to preserve its ability to make a 2022 election.

Taxpayers who relied on the FTB’s previously posted information should correct any payment shortfalls prior to June 15 to avoid any problems going forward. Remember, taxpayers who fail to meet the prepayment requirements are prohibited from making the election for the 2022 taxable year.

If the taxpayer did not pay the elective tax for the 2021 taxable year, then only a $1,000 prepayment is required for the 2022 taxable year.

For more information, register for Spidell’s webinar on California’s Passthrough Entity Tax. June 3 session just added! Click here for details.