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Started By
Message
Check dated 2021 but deposited in 2022 - which year do I pay taxes on it?
Posted on 12/30/21 at 7:37 am
Posted on 12/30/21 at 7:37 am
If a customer pays me with a check written out to my business name and that check is dated in 2021 but I don’t deposit it until 2022, do I pay taxes on it for 2021 or 2022?
4
Posted on 12/30/21 at 7:45 am to TDsngumbo
Pretty sure it's when the money is actually available to you. So in this case 2021.
Posted on 12/30/21 at 7:52 am to castorinho
What year are you deciding to account for it? 2021 or 2022? Just post the check to whatever year you cash it in against your receivables. You have a 90 day window to deposit funds upon receipt of them. Fortune 500 companies do this all the time to float 1st quarter profits, or so I have heard.
Posted on 12/30/21 at 8:16 am to Crossifix437
quote:
Just post the check to whatever year you cash it in against your receivables. You have a 90 day window to deposit funds upon receipt of them. Fortune 500 companies do this all the time to float 1st quarter profits, or so I have heard.
If his company is on accrual basis, the revenue would recorded when the receivable is. Presumably 2021 in this case. If on a cash basis, deposit in 2022 and defer the taxes. The date on the check is essentially meaningless.
Posted on 12/30/21 at 8:17 am to TDsngumbo
Are you on a cash basis accounting?
Posted on 12/30/21 at 8:35 am to Crossifix437
quote:
Fortune 500 companies do this all the time to float 1st quarter profits, or so I have heard.
You have no clue what you are talking about.
No Fortune 500 company is using a cash based accounting system, they all use accruals.
Also, can't forget about that pesky matching principle that your auditors are going to be checking for.
Posted on 12/30/21 at 9:09 am to SlowFlowPro
It’s not for me, specifically. I’m asking because my roofer refuses to pick up my check for the remainder of what I owe him and I’m assuming it’s because he wants to push it to next tax year. He also needs to finish some work, though, and it’s pissing me off that I have to wait as long as I’ve waited so far just because his cheap arse doesn’t want to pay taxes on it until next year. I wrote the check when I got the funds and told him it was ready back in October. I’m not rewriting the check for him.
Posted on 12/30/21 at 9:10 am to iAmBatman
quote:
You have no clue what you are talking about.
No Fortune 500 company is using a cash based accounting system, they all use accruals.
As mandated by law. What an absurd thing to say
Posted on 12/30/21 at 9:11 am to TDsngumbo
quote:
It’s not for me, specifically. I’m asking because my roofer refuses to pick up my check for the remainder of what I owe him and I’m assuming it’s because he wants to push it to next tax year
It's more likely because he's a roofer and they do dumb shite like this all the time.
Posted on 12/30/21 at 9:39 am to TDsngumbo
Is a W2 or 1099 being issued? If so, it needs to match that, which is usually when the check is cut or when funds are deposited via ETF.
Posted on 12/30/21 at 9:47 am to TDsngumbo
quote:
I’m asking because my roofer refuses to pick up my check
Roofers act like they run some kind of mafia outfit.
Posted on 12/30/21 at 9:55 am to TDsngumbo
Assuming you are a small business (less than $25M in gross revenue) then your business is allowed to do cash basis accounting. So technically if you deposit in 2022, then you pay taxes for the 2022 year
Posted on 12/30/21 at 10:50 am to TDsngumbo
If the roofer is on the cash basis, which 99.999 percent sure he is, it's revenue to him when it's available to him. You cannot unnecessarily delay receipt to defer it.
For example, if he received the check in his mailbox on 12/31/21, it is 2021 revenue, even if he doesn't bring it to the bank until Monday, 1/3/22.
If you have had the check ready for pickup since October, it should be 2021 revenue to him.
Umm. Out of all the roofers I have known/met/used over the years, exactly zero of them have anywhere close to the financial sophistication needed to actually think about not picking up the check to defer revenue recognition for tax purposes. It's much more likely he is just incompetent and doesn't want to pick up the check until he can finish the work, because he knows you gonna rat him out otherwise.
For example, if he received the check in his mailbox on 12/31/21, it is 2021 revenue, even if he doesn't bring it to the bank until Monday, 1/3/22.
If you have had the check ready for pickup since October, it should be 2021 revenue to him.
quote:
and it’s pissing me off that I have to wait as long as I’ve waited so far just because his cheap arse doesn’t want to pay taxes on it until next year.
Umm. Out of all the roofers I have known/met/used over the years, exactly zero of them have anywhere close to the financial sophistication needed to actually think about not picking up the check to defer revenue recognition for tax purposes. It's much more likely he is just incompetent and doesn't want to pick up the check until he can finish the work, because he knows you gonna rat him out otherwise.
Posted on 12/30/21 at 10:53 am to Black n Gold
quote:
The date on the check is essentially meaningless.
It is... but when you could have received or actually received the check is meaningful.
Some of y'all need to review the concept of constructive receipt.
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