End-of-Year Tax Tips for 2022

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File ERTC – Get Your Refund Now

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When are 2023 My Taxes Due?

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California Sales Tax

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California sales tax varies by location. There is a state sales tax as well as local district taxes (counties and cities). Multiple district taxes can apply. California has a statewide sales tax rate of 7.5% PLUS some counties have voter- or local government-approved district taxes – also called special tax districts.

California Sales Tax Rates

California (CA) Sales Tax Rate: 7.5%
Maximum rate for local municipalities: 10.75%

Determining California Sales Tax Nexus

Any business with a physical location in California has nexus, and is therefore required to register to collect sales tax, and to file sales tax returns and pay sales tax to the state.

Other activities that create nexus include someone working for you who lives in the state, having California affiliates who advertise your products in exchange for commission when a sale is made from their affiliate link/marketing activities, or attending a tradeshow and making one or more sales at that show.

Retailers who sell on Amazon and use their Fulfillment by Amazon (FBA) program, will have a physical presence in California if any of their products are stored within a California FBA warehouse.

Determining California Sales Tax Nexus for Out of State Sellers

Out of state sellers who do not have a physical presence in California may be required to collect and remit sales tax if they meet any of the following criteria:

  • Affiliate Nexus – California requires businesses with ties to businesses or affiliates in the state to collect and remit sales tax. This could include developing or designing TPP that is distributed by a remote seller.
  • Click Through Nexus – Those who direct traffic to a website for the purpose and intention of generating a sale establish Nexus for that business. Total referrals on sales of more than $10,000 within a year and total sales of $1,000,000 or more are required to establish click-through nexus.
  • Economic Nexus – California’s economic nexus law requires businesses that sell $500,000 or more of TPP into the state directly or via a marketplace to register to collect sales tax. This also impacts in-state businesses based on the municipalities in which they operate.

What is Eligible for California Sales Tax

Sales tax applies to most goods (tangible personal property) purchased by consumers. Unprepared food is not taxable, nor are some medical devices, prescription medications, or sales to the US Government. California does not have any clothing tax exemptions or sales tax holidays.

Other taxable points to consider include:

  • Services – Most services are not taxable by the state of California. Two exceptions are if the service is inseparable from the property being purchased (such as calibration of a machine being sold), or services related to the fabrication or manufacture of tangible personal property.
  • Shipping charges on orders shipped via common carrier (such as UPS, FedEx, or USPS) are not taxable provided that they are stated separately on the invoice and that the amount charged to the customer is the same amount as charged by the carrier. If you charge the customer more than the actual cost charged by the carrier, the difference is taxable.
  • Drop-shipping – Items that are drop-shipped from a California company on behalf of an out-of-state retailer who is not required to hold a California seller’s permit, should be taxed by the drop-shipper.
  • Vehicles purchased outside the state are subject to the 12-month test. If the vehicle, vessel, or aircraft was purchased outside of California, first used outside the state, and then brought into California within 12 months of purchase, it is taxable (with certain restrictions).

Registration

How do I register for a California resale certificate?

Retailers must obtain a California seller’s permit if they are doing business in California. Out-of-state retailers with at least $500,000 in gross receipts to California purchases within the previous or current calendar year, must register, collect, and remit sales tax to California.

You can click here to register online for a seller’s permit or use tax account.

Filing

How do I file California sales and use tax returns?

Filing can be done online or via mail. You can use BOE’s free online filing option or you can choose to use a third-party service to file with any provider that has successfully completed the BOE acceptance testing and is authorized to receive returns and payment information. If filing online, you may pay through the Electronic Funds Transfer program (EFT), ACH Debit, ACH Credit through your own financial institution or make your payment separately.

The EFT payment program is mandatory if you have a California Seller’s Permit and average $10,000 in monthly payment or more, or you have a Special Taxes and Fees account and average monthly tax or fee payments of $20,000 or more. Other sellers can select this as a voluntary option.

Finally, there is a prepayment sales tax rate for motor vehicle fuel, diesel fuel, and aircraft jet fuel.

Deadlines

What are California’s sales tax deadlines?

When you first received your sales tax permit from the state of California, you were assigned a payment schedule. This schedule is either monthly, quarterly, or annually.

The following due dates apply to California sales tax returns. The due date is noted for each period for monthly, quarterly, and annual reporters. If a due date falls on a Saturday, Sunday, or legal holiday, then the return is due the following business day.

Monthly: Due the last day of the month following the reporting period month.

PeriodDue Date
JanuaryFebruary 28 (or Feb. 29 in a leap year)
FebruaryMarch 31
MarchApril 30
AprilMay 31
MayJune 30
JuneJuly 31
JulyAugust 31
AugustSeptember 30
SeptemberOctober 31
OctoberNovember 30
NovemberDecember 31
DecemberJanuary 31

Quarterly: April 30th, July 31st, October 31st and January 31st for prior quarter. (Prepayment returns are due on the 24th of the prior two months.)

PeriodDue Date
January – March (Q1)April 30
April – June (Q2)July 31
July – September (Q3)October 31
October – December (Q4)January 31

Annual:
For Sales Tax Accounts: Due January 31st for prior year.
For Qualified Purchasers and Consumer Use Tax Accounts: April 15th.
Prepayment accounts file on the 24th of the first 2 months of each quarter.

PeriodDue Date
January – DecemberJanuary 31

Amending Online Returns

How do I amend my California sales and use tax return?

There is no electronic method currently available to amend an online return. You must print the return and write the correct figures on the “Confirm Filing” page of the return filed online, then write “Amended Return” across the top. Submit via mail with any additional payment due or file a claim for refund or credit if you have overpaid. Mail documents to:

California Department of Tax and Fee Administration
Special Taxes and Fees
Appeals and Data Analysis Branch (MIC: 33)
PO Box 942879
Sacramento, CA 94279-0033

Penalties and Interest

Beginning the day after a sales tax return is due, penalties and interest will begin to accrue. These include:

  • A 10 percent penalty if you do not file your tax return by its due date, and a 10 percent penalty if your tax payment is late, not to exceed a total of 10 percent.
  • Interest based on the interest rate shown at the bottom of your return, for each month or partial month that the tax remains unpaid.
  • A Collection Cost Recovery Fee (CRF) if taxes remain unpaid for more than 90 days past the due date, unless you enroll in and adhere to a payment plan.

For more details, see Publication 75 on the California Department of Tax and Fee Administration website.

Other things to note:

California collects sales tax for delivery with special tax districts and “engaged in business” locations. Generally, your customer is liable for the district use tax and you may collect it from them as a courtesy. Learn more details at District Taxes and Delivered Sales web page.

Resources:

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When are 1099s due for 2021?

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Most 1099s are due at the same time they were in previous years. 1099 form Copy As are due to the IRS by March 1st if filing by paper, or March 31st when filing electronically. 

Most 1099s are due at the same time they were in previous years. 1099 form Copy As are due to the IRS by March 1st if filing by paper, or March 31st when filing electronically. Copy Bs are due to recipients by January 31st. Pay careful attention to the due dates and to some to the few exceptions to the standard deadlines to avoid incurring penalties from the IRS.

What’s 1099-NEC and when is it due?

Most should be familiar by now with the new Form 1099-NEC which is now used instead of Form 1099-MISC to report payments of at least $600 to freelancers and independent contractors. 1099-NEC is due to both the IRS and recipients by February 1, making it one of the earliest due forms to the IRS. There is no date extension for filing electronically.

 A few 1099 forms have different due dates.

The following forms vary a bit from the conventional due dates mentioned above. The following list notes how they deviate:

  • 1099-LS. Reportable Life Insurance Sale. Due by February 15, 2022, to the reportable policy sale payment recipient. Due by January 15, 2022, to the issuer, or earlier as required by Regulations section 1.6050Y-2(d)(2)(iI)(A).
  • 1099-MISC. Miscellaneous Income. Due to the recipient by Feb 15th if it includes:
    • Substitute dividends and tax-exempt interest payments reportable by brokers of $10 or more.
    • Gross proceeds paid to attorneys of $600 or more.
  • 1099-S. Proceeds from real estate transactions. Due to the recipient Feb 15.
  • 1099-SB. Seller’s Investment in Life Insurance Contract. Due to the IRS March 1. Due to the recipient February 15.
  • 1099-QA. Distributions from ABLE accounts. Due to the IRS by Feb 28th, it does not have a later due date when filing electronically.

Additional Resource: A full list of forms and due dates can be found on the IRS website.

File 1099s correctly and on time to avoid penalties

You’ll want to get your 1099 forms submitted correctly and by the due date as you may be subject to a penalty for failing to do so.

Penalties may apply:

  • If you fail to file timely.
  • If you fail to include all information required to be shown on a return.
  • If you include incorrect information on a return.
  • If you file on paper when you were required to file electronically.
  • If you report an incorrect TIN.
  • If you fail to report a TIN.
  • If you fail to file paper forms that are not machine-readable and applicable revenue procedures provides for a machine-readable paper form.

Penalties increase the longer you wait to correct them

If you realize you made a mistake, it’s important to address it as quickly as possible to avoid paying increased fees.

The penalty is as follows:

  • $50 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $565,000 per year ($197,500 for small businesses, defined below).
  • $110 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,696,000 per year ($565,000 for small businesses).
  • $280 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,392,000 per year ($1,130,500 for small businesses).
What to do if you make a mistake

Fortunately, correcting a mistake isn’t too difficult – but you want to do it quickly. There are two types of errors – each with slightly different steps to address them.

Error Type 1 – This is if your mistake involved an incorrect amount of money, code, or checkbox. To correct it, follow these simple steps:

    1. Prepare a new information return.
    2. Enter an “X” in the “CORRECTED” box at the top of the form.
    3. Correct any recipient information and report other information as per the original return.

Error Type 2 – These mistakes are a little more complicated to fix – and include the following mistakes; no payee TIN, incorrect payee TIN, or incorrect payee name. To correct this, follow these steps:

Step 1:

    1. Prepare a new information return.
    2. Enter an “X” in the “CORRECTED” box at the top of the form.
    3. Enter the payer, recipient, and account number information exactly as it appeared on the original incorrect return; however, enter -0- (zero) for all money amounts.

Step 2:

    1. Prepare a new information return.
    2. Do not enter an “X” in the “CORRECTED” box at the top of the form. Prepare the new return as though it is an original.
    3. Include all the correct information on the form including the correct TIN and name.

A few time-saving tips

TIN matching

The easiest way to stave off penalties for name/TIN mismatches is to use the IRS’ online TIN matching program before completing 1099-MISC/1099-NEC forms. You may verify up to 25 name/TIN combos on the screen. However, you must register with the IRS to use this program.

Additional Resource: Learn more about TIN matching from the IRS.

TIN truncation

You may truncate the first five digits of a payee’s TIN on their paper or electronic copies; forms filed with the IRS must contain the full TIN. These TTINs, as they’re called, look like this: XXX-XX-1234 or ***-**-1234 for SSNs, or XX-XXX1234 or **-***1234 for EINs. You can’t truncate your own EIN.

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2022 Tax Calendar: Important Tax Due Dates and Deadlines

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The 2020 and 2021 federal income tax calendars were really messed up by the COVID-19 pandemic. The IRS extended various tax filing due dates and payment deadlines during both years to give taxpayers more time to take care of their tax obligations. While the IRS is so far sticking with the “normal” tax due dates for 2022, it’s still possible that the Omicron (or some other) variant will eventually wreak havoc on the 2022 tax calendar, too.

Know the tax deadlines that apply to you, so you don’t get hit with IRS penalties or miss out on a valuable tax break.

But even if the 2022 schedule is scrambled once again, one thing will remain the same – you won’t want to miss a tax deadline. If you do, the IRS can hit you hard with penalties and interest. For instance, the standard penalty for failing to file your annual tax return on time is 5% of the amount due for each month your return is late. If you pay your taxes late, the monthly penalty is 0.5% of the unpaid amount, up to 25% of what you owe, plus interest on the unpaid taxes. Similar penalties apply for missing other deadlines. And there could also be other negative consequences for being late, like losing out on a valuable tax break.

It’s easy to avoid these headaches, though — just don’t miss the deadline! But we realize that it’s not always easy keeping track of all the various IRS due dates. So, for those of you who need a little help remembering when to file a return, submit a report or pay a tax, we pulled together a list of the most important 2022 federal income tax due dates for individuals. There’s at least one deadline in every month of the year, so play close attention…we don’t want you to get in trouble with the IRS.

[NOTE: Some of the 2022 due dates listed below are extended for victims of recent natural disasters. In addition, several 2021 due dates were extended to January 3, 2022, for other natural disaster victims. For more information on these extensions, see Colorado Wildfire Victims Get More Time to Pay Taxes; Tax Relief Available for Arkansas, Illinois, Kentucky and Tennessee Tornado Victims; Tax Relief for Hurricane Ida Victims Extended to Feb. 15; Tax Deadlines Extended for Alabama Storm and Flooding Victims; Tax Deadlines Extended for Tennessee Flood Victims; and Tax Relief Available for California Wildfire Victims.]

January 2022 Tax Due Dates
January 3Self-Employed Individuals Pay Half of Deferred 2020 Social Security Taxes
January 10Tips for December 2021 Reported to Employer (Form 4070)
January 18Estimated Tax Payment for 4th Quarter of 2021 (Form 1040-ES)
January 18Farmers and Fishermen Pay Estimated Tax for 2021 (Form 1040-ES)
January 31File 2021 Tax Return (Form 1040) to Avoid Penalty if Last Installment of Estimated Tax Not Paid by January 18
February 2022 Tax Due Dates
February 10Tips for January 2022 Reported to Employer (Form 4070)
February 15File Form W-4 to Reclaim Exemption from Withholding for 2022

The monthly tip reporting deadline is February 10. This time it’s for tips received in January.

In addition, if you were exempt from income tax withholding in 2021 and want to reclaim the exemption for 2022, you need to fill out a new W-4 form and give it to your employer. (Note that you must qualify to claim an exemption.)

March 2022 Tax Due Dates
March 1Farmers and Fishermen File 2021 Tax Return (Form 1040) to Avoid Penalty if Estimated Tax Not Paid by January 18
March 10Tips for February 2022 Reported to Employer (Form 4070)

To avoid a penalty, farmers and fishermen who didn’t pay all their 2021 estimated taxes by January 18 must file their 2021 tax return by March 1.

Employees must report February tips to their employer by March 10.

April 2022 Tax Due Dates
April 1Farmers and Fishermen File 2021 Tax Return (Form 1040) to Avoid Penalty if Estimated Tax Not Paid by January 18
April 11Tips for February 2022 Reported to Employer (Form 4070)
April 18File 2021 Tax Return (Form 1040) and Pay Tax Due (except for residents of Maine and Massachusetts)
April 18File Form 4868 to Request 6-Month Income Tax Return Filing Extension (payment of tax not extended)
April 18File Schedule H (1040) and Pay Employment Taxes for Household Employees (file separately if Form 1040 is not filed)
April 18Estimated Tax Payment for 1st Quarter of 2022 (Form 1040-ES)
April 18Contribute to Individual Retirement Account (IRA) for 2021
April 18Withdraw Excess IRA Contributions in 2021 to Avoid Penalty if Filing of Form 1040 Was Not Extended
April 18Contribute to Health Savings Account (HSA) for 2021
April 18Contribute to Solo 401(k) Plan or Simplified Employee Pension (SEP) Plan for 2021 by Self-Employed if Filing of Form 1040 Was Not Extended
April 19File 2021 Tax Return (Form 1040) and Pay Tax Due for residents of Maine and Massachusetts

April is the most important month on the tax calendar. For most people, April 18 is the last day file a 2021 tax return…unless you file an application for an automatic six-month extension with the IRS, which is also due on April 18. If you employ a nanny, maid, gardener or other household worker, you also have until April 18 to file Schedule H and pay their employment taxes. If you live in Maine or Massachusetts, those due dates fall on April 19, since April 18 is a holiday (Patriot’s Day) in those states.

Finally, workers must report March tips to their employer by April 11, and estimated taxes for the 1st quarter of 2022 are due April 18.

May 2022 Tax Due Dates
May 10Tips for April 2022 Reported to Employer (Form 4070)

After a busy April, things slow down considerable for May. The only notable deadline is for employees to report tips received in April to their boss. That’s due by May 10.

June 2022 Tax Due Dates
June 10Tips for May 2022 Reported to Employer (Form 4070)
June 15Estimated Tax Payment for 2nd Quarter of 2022 (Form 1040-ES)
June 15U.S. Taxpayers Living and Working Abroad File 2021 Tax Return (Form 1040)
June 15U.S. Taxpayers Living and Working Abroad File Form 4868 to Request 4-Month Income Tax Return Filing Extension (payment of tax not extended)
June 15Military Personnel on Duty Outside the U.S. File 2021 Tax Return (Form 1040)
June 15Military Personnel on Duty Outside the U.S. File Form 4868 to Request 4-Month Income Tax Return Filing Extension (payment of tax not extended)

Military personnel and other taxpayers who are serving or living outside the U.S. have until June 15 to file their 2021 tax return. If they want a four-month filing extension, they must submit an application by June 15.

Estimated tax payments for the 2nd quarter of 2022 are also due June 15, while the tip reporting deadline for workers who received tips in May is June 10.

July 2022 Tax Due Dates
July 11Tips for June 2022 Reported to Employer (Form 4070)

For July, employees need to report any tips receive in June to their employer by July 11. Other than that, you can enjoy your time at the pool or beach without having to worry about tax deadlines!

August 2022 Tax Due Dates
August 10Tips for July 2022 Reported to Employer (Form 4070)

The summer slowdown for tax deadlines continues in August. The only important due date for individuals is the monthly tip report. Workers who received tips in July must report them to their employer by August 10.

September 2022 Tax Due Dates
September 12Tips for August 2022 Reported to Employer (Form 4070)
September 15Estimated Tax Payment for 3rd Quarter of 2022 (Form 1040-ES)

There are two notable tax due dates in September. First, employees must report August tips to their employer by September 12. Second, estimated tax payments for the 3rd quarter of 2022 are due by September 15.

October 2022 Tax Due Dates
October 11Tips for September 2022 Reported to Employer (Form 4070)
October 17File Extended 2021 Tax Return (Form 1040) and Pay Tax Due
October 17Withdraw Excess IRA Contributions in 2021 to Avoid Penalty if Filing of Form 1040 Was Extended
October 17Contribute to Solo 401(k) Plan or Simplified Employee Pension (SEP) Plan for 2021 by Self-Employed if Filing of Form 1040 Was Extended

If you were granted an extension to file your 2021 tax return, now’s the time to send that return to the IRS. The due date for extended returns is October 17. For those who received an extension, October 17 is also the last date for (1) self-employed people to contribute to a solo 401(k) or a simplified employee pension (SEP) plan for 2021, or (2) withdrawing excess IRA contributions made in 2021.

For workers who received tips in September, the deadline to report those tips to your employer is October 11.

November 2022 Tax Due Dates
November 10Tips for October 2022 Reported to Employer (Form 4070)

November is another slow month on the tax calendar. The only deadline is for employees reporting tips earned in October to their boss. That report is due November 10.

December 2022 Tax Due Dates
December 12Tips for November 2022 Reported to Employer (Form 4070)
December 31Contribution to Employer-Sponsored Retirement Plan for 2022 (401(k), 403(b), 457 or federal thrift savings plans)
December 31Required Minimum Distribution (RMD) by Individuals Who are 73 or Older at the End of 2022

December is the time to make any last-minute moves to lower your tax bill for the year. But there are also some other important due dates that you need to be aware of to stay out of hot water with the IRS. There’s the monthly tip reporting deadline, which is December 12 for reporting November tips to your employer. Plus, 2022 contributions to employer-sponsored retirement plans (e.g., 401(k), 403(b), 457 or federal thrift savings plans) must be in by December 31. That’s also the deadline for taking an RMD for 2022 if you’re 73 or older at the end of the year.

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Tax Year 2022 Inflation Rates Announced

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As the economy warms up in recovery mode, inflation starts to raise its ugly head. Everything—from baby food to new cars—costs more.

As the economy warms up in recovery mode, inflation starts to raise its ugly head. Everything—from baby food to new cars—costs more.

To keep up, the Internal Revenue Service has to update its tax processes and forms to adjust for inflation. So, the IRS has released the newest inflation adjustments for the 2022 tax year. They’ll generally apply to returns filed in 2023.

The full list is laid out in Revenue Procedure 2021-45.

What are the major changes?

The standard deduction generally leads the list of tax items of interest to taxpayers. Because of the adjustment for inflation, married couples filing jointly will see their standard deduction rise $800 to $25,900 for tax year 2022.

Singles and married taxpayers filing separately will see their standard deduction go up $400 to $12,950.

Heads of household also get a higher standard deduction; theirs rises by $600 to $19,400.

Not everything increases, though. The personal exemption stays at zero for tax year 2022, just like the prior year. The personal exemption was eliminated by the Tax Cuts and Jobs Act, signed into law in late 2017.

What are the marginal rates?

There’s no change in the top tax rate for tax year 2022; that remains at 37% for single taxpayers with income greater than $539,900 or for married taxpayers filing jointly with incomes above $647,850.

Other rates include:

  • 35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
  • 32% for incomes over $170,050 ($340,100 for married couples filing jointly);
  • 24% for incomes over $89,075 ($178,150 for married couples filing jointly);
  • 22% for incomes over $41,775 ($83,550 for married couples filing jointly);
  • 12% for incomes over $10,275 ($20,550 for married couples filing jointly).
  • The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).

There’s no limit on itemized deductions in 2022, like the previous four tax years. The limitation was wiped out by the Tax Cuts and Jobs Act.

The Alternative Minimum Tax exemption for 2022 got a boost; the exemption amount goes up to $75,900 from 2021’s $73,600. Phase-out ranges were also increased.

Other various rate increases include:

Earned Income Tax Credit – The maximum EITC amount is marginally higher, rising from $6,728 to $6,935 for qualifying taxpayers with three or more children in tax year 2022. Revenue Procedure 2021-45 has details on other maximum levels, income thresholds and phase-outs.

Transportation Fringe Benefit – In 2022, the monthly limit for the qualified transportation fringe benefit and the limitation for qualified parking goes up to $280.

Foreign Income Exclusion – The exclusion for foreign earned income increases to $112,000 for tax year 2022. The 2021 exclusion was $108,700.

Gifts – For 2022, the exclusion for gifts is raised to an annual maximum of $16,000, an increase of $1,000 from the prior tax year.

Adoptions – The maximum credit for adoptions in tax year 2022 is increased to $14,890, up from $14,440 in 2021.

For more information on these and other rates, maximums and health account limits, see Revenue Procedure 2021-45.

Source: IR-2021-219

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American Relief Act and EIP 3

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EIP 3 Payments: Treasury successfully processed 90 million payments this past week using direct deposit for the stimulus (EIP 3) payments representing about $242 billion.  In addition, they did send out approximately 150 thousand checks for $442 million for EIP recipients.   The next round of EIP 3 for this coming week will be about 30 million payments. The IRS expects to continue to send out payments weekly until they cover everyone in which they have information.  

Other Elements of the Relief Act that impacts the Tax Preparation community:   There were also a number of tax law changes in that bill that impact taxpayer not only for next year but also this current filing season.  

Unemployment Compensation Exemption The act makes the first $10,200 in unemployment benefits tax-free for 2020 tax returns in this current filing season.  This retroactive benefit is intended for each person with incomes less that $150,000.   The IRS will be providing guidance soon on how to handle this feature on not only already filed returns, but also for 2020 returns you are preparing now and in the future.  Look out for news from IRS very soon on this topic.  

Child Tax Care Credits Increased The act also increased the amount of the tax credit for 2021 tax returns for next tax season, to $3000 per child, as well as liberalizing some of the rules on the existing credit.  One of the features in the act was to instruct the IRS to make prorated payments of this new credit to those qualifying starting later in 2020.    

The IRS will provide guidance on this feature later in the year as well as instruction on options and tools to opt out of the prepayment feature.  
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