Author Topic: How late can you deposit a check and count it as last years income?  (Read 8663 times)

Offline MenachemMendel

  • Dansdeals Bronze Elite
  • *
  • Join Date: Jun 2010
  • Posts: 42
  • Total likes: 0
  • DansDeals.com Hat Tips 0
    • View Profile
How late can you deposit a check and count it as last years income?

My employer is a little backed up and is paying me a bit late, hence the check for the last two weeks of 2011 will be deposited sometime January 2012.
In my case I would benefit from reporting that income as 2011 income.

How does it work? Anything that wasn't deposited by Dec 31 counts as 2012?

Additional info: My boss writes me checks and I just get a 1099 at the end of the year. To him I am an "office expense" so he doesn't pay taxes on my salary.
Location: NY.

Offline Dan

  • Administrator
  • Dansdeals Lifetime 50K Diamond Elite
  • **********
  • Join Date: May 2008
  • Posts: 68932
  • Total likes: 17317
  • DansDeals.com Hat Tips 16442
  • Gender: Male
    • View Profile
  • Location: CLE
  • Programs: UA GS, AA EXP, DL Dirt, Hyatt Glob, Fairmont Lifetime Plat, DD Diamond, Blocked By @NeriaKraus
Re: How late can you deposit a check and count it as last years income?
« Reply #1 on: December 27, 2011, 09:45:24 PM »
Your boss is probably cheating you and government.

At any rate I think you need to receive and/or deposit by 12/31 to count it as 2011 income.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline AJK

  • Dansdeals Lifetime 20K Presidential Platinum Elite
  • ********
  • Join Date: Jun 2011
  • Posts: 25500
  • Total likes: 723
  • DansDeals.com Hat Tips 15
  • Gender: Male
    • View Profile
  • Programs: United Concierge Key; Delta Global Services; American Chairman; US Airways 1K; Hilton Sapphire; Hyatt Tritium; Marriott Californium; Starwood Kryptonium; Hertz Plutonium; National Adamantium, Avis Executive Proactanium
Re: How late can you deposit a check and count it as last years income?
« Reply #2 on: December 27, 2011, 09:50:12 PM »
Your boss is probably cheating you and government.

At any rate I think you need to receive and/or deposit by 12/31 to count it as 2011 income.

Receipt is all that is necessary.

In fact, once in receipt before 12/31, cannot count as 2012.
2015: 116K bkd | 1.6M brnd | F: OZ,NH,AA,EK | J: UA,CA,TK,DL,TN,AF,VA | LIH,NRT,ROR,PEK,CNS,BOB,MEL,TLV & Pacific Hopper

Offline sguitarist18

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jul 2011
  • Posts: 1838
  • Total likes: 895
  • DansDeals.com Hat Tips 6
    • View Profile
  • Location: NY
Re: How late can you deposit a check and count it as last years income?
« Reply #3 on: December 27, 2011, 09:55:49 PM »
As far as I understand, income earned during 2011, MUST be reported for 2011, regardless of when it is collected.

Or is that just for businesses?

Offline joeb1

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Aug 2011
  • Posts: 3025
  • Total likes: 40
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: Brooklyn
  • Programs: SPG Platinum, Hyatt Diamond, Hilton Diamond, CPA, Travel Agent
Re: How late can you deposit a check and count it as last years income?
« Reply #4 on: December 27, 2011, 10:28:26 PM »
As far as I understand, income earned during 2011, MUST be reported for 2011, regardless of when it is collected.

Or is that just for businesses?

+1

Offline Dan

  • Administrator
  • Dansdeals Lifetime 50K Diamond Elite
  • **********
  • Join Date: May 2008
  • Posts: 68932
  • Total likes: 17317
  • DansDeals.com Hat Tips 16442
  • Gender: Male
    • View Profile
  • Location: CLE
  • Programs: UA GS, AA EXP, DL Dirt, Hyatt Glob, Fairmont Lifetime Plat, DD Diamond, Blocked By @NeriaKraus
Re: How late can you deposit a check and count it as last years income?
« Reply #5 on: December 27, 2011, 10:59:01 PM »
Not true.  Personal taxes are cash basis generally.
You pay taxes on money collected during the year, not on money earned that year and paid out the next year.

Very different than business accounting.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline AJK

  • Dansdeals Lifetime 20K Presidential Platinum Elite
  • ********
  • Join Date: Jun 2011
  • Posts: 25500
  • Total likes: 723
  • DansDeals.com Hat Tips 15
  • Gender: Male
    • View Profile
  • Programs: United Concierge Key; Delta Global Services; American Chairman; US Airways 1K; Hilton Sapphire; Hyatt Tritium; Marriott Californium; Starwood Kryptonium; Hertz Plutonium; National Adamantium, Avis Executive Proactanium
Re: How late can you deposit a check and count it as last years income?
« Reply #6 on: December 27, 2011, 11:00:58 PM »
Not true.  Personal taxes are cash basis generally.
You pay taxes on money collected during the year, not on money earned that year and paid out the next year.

Very different than business accounting.

So why is the below inaccurate?

Receipt is all that is necessary.

In fact, once in receipt before 12/31, cannot count as 2012.
2015: 116K bkd | 1.6M brnd | F: OZ,NH,AA,EK | J: UA,CA,TK,DL,TN,AF,VA | LIH,NRT,ROR,PEK,CNS,BOB,MEL,TLV & Pacific Hopper

Offline Ergel

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Jun 2010
  • Posts: 13070
  • Total likes: 905
  • DansDeals.com Hat Tips 3
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #7 on: December 27, 2011, 11:04:15 PM »
So why is the below inaccurate?


He was responding to the other posters not you.

 I had a similar (albeit less shady) situation last year and my accountant said it counts for the following year's tax
Life isn't about checking the boxes. Nobody cares.

Offline MenachemMendel

  • Dansdeals Bronze Elite
  • *
  • Join Date: Jun 2010
  • Posts: 42
  • Total likes: 0
  • DansDeals.com Hat Tips 0
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #8 on: December 27, 2011, 11:33:47 PM »
Receipt is all that is necessary.
Does that mean that if I receive a check dated 2011 during 2011, but for some reason waited till sometime January 2012 to deposit it, that will count towards 2011?
Technically I received it during 2011.

Offline AJK

  • Dansdeals Lifetime 20K Presidential Platinum Elite
  • ********
  • Join Date: Jun 2011
  • Posts: 25500
  • Total likes: 723
  • DansDeals.com Hat Tips 15
  • Gender: Male
    • View Profile
  • Programs: United Concierge Key; Delta Global Services; American Chairman; US Airways 1K; Hilton Sapphire; Hyatt Tritium; Marriott Californium; Starwood Kryptonium; Hertz Plutonium; National Adamantium, Avis Executive Proactanium
Re: How late can you deposit a check and count it as last years income?
« Reply #9 on: December 27, 2011, 11:35:15 PM »
Does that mean that if I receive a check dated 2011 during 2011, but for some reason waited till sometime January 2012 to deposit it, that will count towards 2011?
Technically I received it during 2011.

Correct.
2015: 116K bkd | 1.6M brnd | F: OZ,NH,AA,EK | J: UA,CA,TK,DL,TN,AF,VA | LIH,NRT,ROR,PEK,CNS,BOB,MEL,TLV & Pacific Hopper

Offline MenachemMendel

  • Dansdeals Bronze Elite
  • *
  • Join Date: Jun 2010
  • Posts: 42
  • Total likes: 0
  • DansDeals.com Hat Tips 0
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #10 on: December 28, 2011, 12:04:49 AM »
Correct.
Thanks, How late into 2012 can I wait to deposit it  ;D ?

Offline AsherO

  • Global Moderator
  • Dansdeals Lifetime 30K Presidential Platinum Elite
  • **********
  • Join Date: May 2008
  • Posts: 31016
  • Total likes: 7975
  • DansDeals.com Hat Tips 79
    • View Profile
  • Location: NYC
Re: How late can you deposit a check and count it as last years income?
« Reply #11 on: December 28, 2011, 12:06:25 AM »
Your boss is probably cheating you and government.

What determines whether you're a consultant/contractor (1099) or employee W-2? How is his boss cheating him, does it affect SS?
DDF FFB (Forum From Birth)

Offline Dan

  • Administrator
  • Dansdeals Lifetime 50K Diamond Elite
  • **********
  • Join Date: May 2008
  • Posts: 68932
  • Total likes: 17317
  • DansDeals.com Hat Tips 16442
  • Gender: Male
    • View Profile
  • Location: CLE
  • Programs: UA GS, AA EXP, DL Dirt, Hyatt Glob, Fairmont Lifetime Plat, DD Diamond, Blocked By @NeriaKraus
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline AsherO

  • Global Moderator
  • Dansdeals Lifetime 30K Presidential Platinum Elite
  • **********
  • Join Date: May 2008
  • Posts: 31016
  • Total likes: 7975
  • DansDeals.com Hat Tips 79
    • View Profile
  • Location: NYC
DDF FFB (Forum From Birth)

Offline BAHayman

  • Administrator
  • Dansdeals Lifetime Platinum Elite
  • **********
  • Join Date: Mar 2010
  • Posts: 1939
  • Total likes: 28
  • DansDeals.com Hat Tips 0
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #14 on: December 28, 2011, 07:37:50 AM »
So then the 1099 that one receives and is filed with the IRS would report a different amount than the amount that one would put on a 1040, correct?

Offline MarkS

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Dec 2009
  • Posts: 3855
  • Total likes: 70
  • DansDeals.com Hat Tips 5
  • Gender: Male
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #15 on: December 28, 2011, 11:38:35 AM »
Receipt is all that is necessary.

In fact, once in receipt before 12/31, cannot count as 2012.
Not true.  Personal taxes are cash basis generally.
You pay taxes on money collected during the year, not on money earned that year and paid out the next year.

Very different than business accounting.
Does that mean that if I receive a check dated 2011 during 2011, but for some reason waited till sometime January 2012 to deposit it, that will count towards 2011?
Technically I received it during 2011.
To shed some light on this (as a CPA candidate), the above quotes are all correct. You are presumably a cash basis taxpayer, and therefore income is when received, not when the work was performed. If you get a check, that is considered that you received it and even if you wait to cash it (or for that matter even if you throw it out) you have still received it and are taxed based on when you got the check.
Many employers often put their employees on a 1099 unlawfully. If you work exclusively for one person and have no right to one morning email your boss and say you're not coming in for the next few days because you're doing a job for a friend etc YOU ARE AN EMPLOYEE and not self employed. A classic case of a self employed person is a plumber who advertises in the yellow pages and works for 5 different people every day. Although they 'hire' him for that job, they are not his 'boss' and can't dictate what other jobs he takes or his work hours.

Offline MenachemMendel

  • Dansdeals Bronze Elite
  • *
  • Join Date: Jun 2010
  • Posts: 42
  • Total likes: 0
  • DansDeals.com Hat Tips 0
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #16 on: December 28, 2011, 12:51:51 PM »
To shed some light on this (as a CPA candidate), the above quotes are all correct. You are presumably a cash basis taxpayer, and therefore income is when received, not when the work was performed. If you get a check, that is considered that you received it and even if you wait to cash it (or for that matter even if you throw it out) you have still received it and are taxed based on when you got the check.
Many employers often put their employees on a 1099 unlawfully. If you work exclusively for one person and have no right to one morning email your boss and say you're not coming in for the next few days because you're doing a job for a friend etc YOU ARE AN EMPLOYEE and not self employed. A classic case of a self employed person is a plumber who advertises in the yellow pages and works for 5 different people every day. Although they 'hire' him for that job, they are not his 'boss' and can't dictate what other jobs he takes or his work hours.
Thank you for enlightening us.
My work situation, is hard to define, I guess I provide a service, but since I do so much for this particular person I'm basically in his office daily. He does have a degree of expectation and dependence on my work, though I do notify him when I want to take off and he's usually OK with it.
On paper though, is there anything that defines if I'm an employee or an office expense?

PS. What are the chances that someone can, CH"V, be audited for a 1099 that's about $15K?

Offline MarkS

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Dec 2009
  • Posts: 3855
  • Total likes: 70
  • DansDeals.com Hat Tips 5
  • Gender: Male
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #17 on: December 28, 2011, 01:13:09 PM »
Thank you for enlightening us.
My work situation, is hard to define, I guess I provide a service, but since I do so much for this particular person I'm basically in his office daily. He does have a degree of expectation and dependence on my work, though I do notify him when I want to take off and he's usually OK with it.
On paper though, is there anything that defines if I'm an employee or an office expense?

PS. What are the chances that someone can, CH"V, be audited for a 1099 that's about $15K?
Certain factors indicate that a person should be on a w-2:
1)If the employer gives you the tools and equipment and place to work
2)Gives you support like hiring secretary to help you
3) Gives you training to improve your job skills
4)Gives you job benefits like health insurance
5)Pays for your time rather than for the job completion (ie $15 per hour as opposed to paying you $45 to do something no matter how long it ends up taking you).

The chances of anyone getting audited are less than 1%, however, you never know what could happen....
« Last Edit: December 28, 2011, 01:42:34 PM by MarkS »

Offline MarkS

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Dec 2009
  • Posts: 3855
  • Total likes: 70
  • DansDeals.com Hat Tips 5
  • Gender: Male
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #18 on: December 28, 2011, 01:19:14 PM »
My tax professor told me of a case where a Car Repair shop was located on Route 9 somewhere in Central Jersey on the same block as a few used car dealers. All of his business was fixing cars for those dealers and he barely dealt with any other walk in clients.

The IRS audited him one day and said that he should really be considered an employee of all 5 car dealers and not a self employed.

He didn't advertise, didn't even have a phone line in his shop (obviously not in the Yellow Pages) and spent all year working 'exclusively' for these 5 dealers.  It went to the courts but eventually the ruling was in the IRS' favor and all 5 dealers had to pay back taxes (with penalties) for the years that they didn't pay taxes on the 'wages' that they paid.

Every case is different and depending on the specifics of your situation it could be that it's not so clear cut and even if the IRS would challenge you, you could possibly still win in court. However, in case it is clear cut that you should be on a w-2, speak to your CPA.

Offline MenachemMendel

  • Dansdeals Bronze Elite
  • *
  • Join Date: Jun 2010
  • Posts: 42
  • Total likes: 0
  • DansDeals.com Hat Tips 0
    • View Profile
Re: How late can you deposit a check and count it as last years income?
« Reply #19 on: December 28, 2011, 01:21:59 PM »
The chances of anyone getting audited are less than 1%, however, you never know what could happen....
And the chances of anyone with an income of $15K getting audited are the same as higher incomes?