When Do You Report Your Income?
By Tom Copeland. Posted with permission
It's the last day of the year and a parent hands you a check for $150. You deposit the check on January 2nd.
What tax year do you report this income?
If the parent paid you on January 2nd for the last week of December, it's income for the January tax year.
If you receive a check for $150 on December 20th and wait to deposit the check in the bank until January, it's still December's income because that's when you received it.
When you receive your Food Program check in January, it's January's income, even though the reimbursement is for food you served in the previous year.
When to claim expenses
Expenses are claimed in the year you pay for them.
So, if you bought something on December 31st, you can deduct it that year.
What happens when you buy something in December with a credit or debit card, but don't pay for it until the next year?
When you buy something with a credit or debit card, you are obligating yourself to pay the expense when you sign your name on the bill. Therefore, this would be a December expense.
Hope you had a wonderful 2014 and that 2015 is even better!
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