If you file California sales tax returns quarterly, you’ll need to understand how prepayments work and how they affect your filing. This guide explains everything clearly.
What are California Sales Tax Prepayments?
California requires certain businesses, especially those filing quarterly sales tax returns, to make monthly prepayments for the first two months of each quarter. Think of these prepayments as estimated payments for the tax you expect to owe during those months. These amounts are then credited towards your total sales tax liability for the entire quarter.
For example, for Q3 (July–September):
July → first prepayment is due
August → second prepayment is due
September → The sales tax for this month is included when you file your fill quarterly return.
When you file your Q3 return, the total sales tax for the quarter (July–September) is calculated. These prepayments you made for July and August are then automatically deducted from that this total.
How Prepayments are Applied (a simple example)
Here’s an example to illustrate how this works:
Month | Tax Liability | Prepayment Made | Notes |
July | $16,262.89 | ✅ | Applied as prepayment #1 |
August | $18,908.73 | ✅ | Applied as prepayment #2 |
September | $16,544.96 | ❌ | Reported in Q3 filing |
Total Quarterly Tax Due (Q3) | $50,105.03 |
|
|
Less Prepayments (July + August) | $35,171.62 |
|
|
Remaining Tax Due (September) | $14,933.41 |
| This is what you stil owe |
In this example, your business already paid $35,171.62 through your July and August prepayments. When filing the Q3 return, the California Department of Tax and Fee Administration (CDTFA) automatically credits these payments. This means your business only needs to pay the remaining amount of $14,933.41 which covers the September liability.
Why Your Filing Report Might Not Show Deductions Yet
If your quarterly filing report in Kintsugi (or your accounting platform) doesn’t immediately reflect these prepayment deductions, there’s no need to worry. The CDTFA applies these credits automatically on their end when you file your return.
Kintsugi is continuously improving how these prepayments appear in the filing report and admin panel for better clarity.
Key takeaways
If you’re a California quarterly filer, you’ll make two monthly prepayments before submitting your quarterly return.
These prepayments are credited toward your total tax due for the quarter.
The state system (CDTFA) handles these credits automatically when you file.
You’ll only need to pay the remaining balance for the last month of the quarter.
Tip: You can confirm your applied prepayments and view remaining balance, simply log in to your CDTFA account and reviewing your payment history under “Prepayments.”