By: Pedro T. Rincon, CPA, CVA
It’s hard to believe that summer is upon us! As children close out their school years and families gear up for vacation plans, businesses should also begin planning to make sure that they are addressing a couple of important deadlines that are coming up in June.
Pass-Through Entity Tax Election for 2022
As was discussed in our October newsletter last year (CLICK HERE FOR REFERENCE}, 2021 was the first year in which qualified California Partnerships and S-Corporations could make a Pass-Through Entity (PTE) tax election. This allows certain pass-through entities to pay state income tax at the PTE level and allows qualified owners to be able to bypass the State and Local Tax Limit (SALT) of $10,000. In return, qualified owners can get a nonrefundable tax credit for their share of the entity level state tax. Any PTE tax credit that exceeds a taxpayer’s California personal income tax for the current year can be carried forward for up to five years.
For tax year 2022, qualified PTE’s must submit the PTE tax in two payments. The first payment is due on June 15, 2022. The amount due is the greater of 50% of elective tax paid in the prior year, or $1,000. If a PTE did not make the election in 2021, they may want to consider making the $1,000 payment in order to make the election for 2022.
CalSavers Deadline
By June 30, 2022, employers with five or more employees are required to have a retirement plan in place for workers — either through a private-market option, like a 401(k), or through the state-run CalSavers program.
Employers can register through the CalSavers website (www.calsavers.com) or, if they are offering a qualified private-market alternative like a 401(k), file an exemption on the same site. After registering, the employer is required to add employees within 30 days of completing the registration. There is some light maintenance required after registration.
Employers who miss the deadline will pay a fine of $250 per eligible employee if noncompliance extends 90 days or more after the notice; and that increases to an additional $500 per eligible employee if noncompliance extends 180 days or more after the notice.
Pedro T. Rincon is a certified public accountant and certified valuation analyst with Osborne Rincon, CPAs. He can be reached at (760)777-9805 or princon@osbornerincon.com. Osborne Rincon is one of the oldest and most respected full-service accounting firms in the Coachella Valley