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kyphysics
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If I worked Dec. 2017 and didn't get paid until January 2018, is that taxable income for a 2017 tax filing?
Anyone know? Thanks.
Anyone know? Thanks.
It's generally applicable to the 2018 tax year. If this is a paycheck from a company, you should have a pay statement that says which year it is applied to.kyphysics said:If I worked Dec. 2017 and didn't get paid until January 2018, is that taxable income for a 2017 tax filing?
Anyone know? Thanks.
If you made the payment after the employee's death but in the same year the employee died, you must withhold social security and Medicare taxes on the payment and report the payment on the employee's Form W-2 only as social security and Medicare wages to ensure proper social security and Medicare credit is received. On the employee's Form W-2, show the payment as social security wages (box 3) and Medicare wages and tips (box 5) and the social security and Medicare taxes withheld in boxes 4 and 6. Do not show the payment in box 1.
If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes.
Borg said:It's generally applicable to the 2018 tax year. If this is a paycheck from a company, you should have a pay statement that says which year it is applied to.
.Scott said:The answer is in the instructions the employer uses in preparing the W-2. Those instructions are here:
https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
That form does not have a single statement that answers your question concisely. But in every case, it refers to the payment of wages - and in some cases refers to those payments during the calendar year.
Here is a good example:So the answer is - it would be taxable in the year you were paid - not necessarily the year you worked the hours.
In that case, you have a bit of a choice. You are allowed to consider income when it becomes due or when it is actually received - but you need to keep records consistently.kyphysics said:Yeah, I clarified my situation in the post above. I wasn't a W2 worker, but a 1099 one (although, for some companies, I didn't get a 1099, due to being under $600 in income from their projects). Thx anyways, though!
Tax advice is not like medical (or even legal) advice. There is substantially less risk.Dr.D said:Is it safe to be giving tax advice when none of us are tax experts? I would not think so, so why is this thread allowed to continue?
I didn't say "risk free", I said "less risk".Dr.D said:State and federal penalties are not exactly what I think of as risk free. In a very real sense, tax advice is legal advice.
Tom.G said:I had that problem many years ago when a check was mailed on Dec 31 and I received it on Jan 3. The employer of course wrote it off for the earlier year and I, of course, did not include it on that years return. Several months later the IRS sent me a letter asking about the discrepancy. I responded with the above info and informed them that since I did not have "constructive use" of the funds in the earlier year I did not include it on my return, and that it would appear on the following year return. That was the last I heard about it.
That "constructive use" term appears in several of the more technical IRS publications and seems to be treated as a legal term.
russ_watters said:Tax advice is not like medical (or even legal) advice. There is substantially less risk.
kyphysics said:At what point do you guys hire a tax professional to do your taxes?
Since there are no laws dictating this, the general answer is "when you no longer think you can handle it yourself."kyphysics said:Since this thread topic has already been posted and it's tax season, I thought I'd ask:
At what point do you guys hire a tax professional to do your taxes? I've never had to in the past and don't plan to this year either. But what level of complexity makes you guys go the "pro" route? E.g., when securities investments are involved? ...when your income is 6-figures or more?, etc.
Since the funds were made available on Dec 31, the term "constructive receipt" applies.Tom.G said:I had that problem many years ago when a check was mailed on Dec 31 and I received it on Jan 3. The employer of course wrote it off for the earlier year and I, of course, did not include it on that years return. Several months later the IRS sent me a letter asking about the discrepancy. I responded with the above info and informed them that since I did not have "constructive use" of the funds in the earlier year I did not include it on my return, and that it would appear on the following year return. That was the last I heard about it.
That "constructive use" term appears in several of the more technical IRS publications and seems to be treated as a legal term.
With respect to legal matters/questions involving the federal government, the answer is often found in the US Code or Code of Federal Regulations (in the US), or in a publication of the particular administrative department responsible for the regulation. Finding the specific answer can be a chore, which is why folks engage a lawyer, or in this case, a license accountant or book-keeper.Constructive receipt.
Income is constructively received when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations.
russ_watters said:Since there are no laws dictating this, the general answer is "when you no longer think you can handle it yourself."
Astronuc said:publication of the particular administrative department responsible for the regulation
Astronuc said:Since the funds were made available on Dec 31, the term "constructive receipt" applies.
http://www.aipb.org/pdf/PAYROLL.pdf
https://www.irs.gov/publications/p538#en_US_201612_publink1000270642
With respect to legal matters/questions involving the federal government, the answer is often found in the US Code or Code of Federal Regulations (in the US), or in a publication of the particular administrative department responsible for the regulation. Finding the specific answer can be a chore, which is why folks engage a lawyer, or in this case, a license accountant or book-keeper.
kyphysics said:The question is how do they even know?!
Vanadium 50 said:See above - the Federal Tax Coordinator.
Borg said:It's generally applicable to the 2018 tax year. If this is a paycheck from a company, you should have a pay statement that says which year it is applied to.
I would go with "Practical."kyphysics said:Is that kind of sleazy of me?
Not at all. From their viewpoint, they're helping a potential customer. If you're happy with their customer service in that instance, you're more likely to become a paying customer.kyphysics said:Is that kind of sleazy of me?
Yes, the income earned in December 2017 is considered taxable for the year 2017.
Yes, any income earned in December 2017 must be reported on your 2017 tax return.
If you receive the income in January 2018, it will be considered taxable for the year 2018 and should be reported on your 2018 tax return.
The income earned in December 2017 will be included in your total taxable income for the year 2017, which may affect your tax bracket and the amount of taxes you owe.
Yes, any income earned in December 2017 is still considered taxable, even if you have not yet received it. You should report it on your 2017 tax return and pay taxes on it accordingly.