The pay period is from Monday 12/23/19 till Friday 01/03/20 and this pay period gets cashed into me on 01/10/20 (Not sure if this piece of info is relevant). Do I have to include this on the 2019 tax year or the 2020 tax year, or do I pro-rate it by days? Or, can I chose any of these options?


3 Answers 3


Income is considered to be part of the tax year in which you receive the paycheck. Thus, even though you earned it in 2019, it'll be on your 2020 W-2.

This is fair, because you'll have a similar situation at the end of 2020. IOW, the "extra" 2019 income on your 2020 W2 will be offset by the 2020 income that will be on your 2021 W2.

  • 3
    Exactly, it’s not up to taxpayer, the W2 (or 1099) dictated the year. Commented Jul 28, 2019 at 2:59
  • Is that the date you get paid, or the date you are supposed to be paid? If you are supposed to get paid on the last working day of the month, and there is a problem with the payroll system or cashflow and you receive the money later?
    – gnasher729
    Commented Jul 28, 2019 at 9:41
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    Under IRS rules, the pay date is the date that you have access to the funds "without substantial limitation or restriction". If you are supposed to be paid this year but you do not have access to the funds until next year, the pay counts toward next year's wages.
    – MTA
    Commented Jul 28, 2019 at 14:29
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    Beware this answer assumes "cash" accounting rules. 99.999% of people are on "cash" accounting rules, but if you're not you can't use this answer.
    – Joshua
    Commented Jul 28, 2019 at 14:41
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    The most important point is that you file based on what's on your W-2. If you report an amount on your 1040 which is different from the amount shown on your W-2 you're basically begging to be audited. Resist the temptation to overthink things. Put your W-2 amounts on your 1040 and you'll be fine. Commented Jul 28, 2019 at 21:09

You're over-thinking this. Assuming you're an employee, you use whatever amount is shown on your W2 form. If you're an independent contractor, whatever's shown on your 1099s, likewise if it's income from stocks &c.

  • 5
    Not really. Not all contractor payments, or investments, are required to be reported on 1099, and even when it is required the payer can make a mistake -- but you are still rwequired to file a correct return and can be penalized if you don't. Do look at those forms, and if something is on the edge and their determination is reasonable and doesn't hurt (i.e. balances out as RonJohn said) go with that to save work. Commented Jul 28, 2019 at 21:15
  • @dave_thompson_085: While that's true, it applies to a small fraction of contractors &c. The OP is not one of those, unless s/he phrased the post in a very confusing way.
    – jamesqf
    Commented Jul 29, 2019 at 4:46
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    A person needs to know the answer to this if they want to know the number of paychecks remain in the year when making changes to their 401(k), HSA, FSA deposits. They also need to know if they changed companies in the middle of the year and the new company won't halt the deduction when they meet the IRS limit. They need to know if they need to adjust tax withholding to not have too little withheld... Commented Jul 29, 2019 at 13:05
  • @mhoran_psprep: I think not, but in any case, that's not the question. The question is about what numbers to put on your tax return, which (except in exceptional cases) will simply be the numbers on your W2/1099.
    – jamesqf
    Commented Jul 30, 2019 at 3:39

The default accounting rule for personal income is "cash method". Under this method, the tax year for income is not based on when the income is earned, but when you have "effective receipt" of the money, which as MTA says in the comments, is when "you have access to the funds 'without substantial limitation or restriction'." If you have an in-office mailbox, for instance, and your paycheck is placed in it on Dec 15, but you don't bother picking it up until Jan 1, then your effective receipt is Dec 15: even though you didn't actually have possession of it until Jan 1, picking up the check and depositing it is not considered a "substantial limitation". On the other hand, if your company is late on payroll and doesn't get the check out until Jan 1, that will probably be the date that will be considered your "effective receipt". Basically, as soon as you either have the money, or could have the money if you wanted, you have effective receipt.

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