It's my understanding that, right now (Feb 21) at least, I can put money into an IRA and have it count towards my 2019 taxes (if I haven't filed yet) instead of my 2020 taxes.

Can I do the same for business expenses? I got a 1099-MISC last year and I'm wondering if I can deduct that off of my taxes for 2019 (I haven't yet filed) instead of my 2020 taxes.

  • 1
    What is the tax year that the 1099-MISC is for? It's typically shown in the same box that says "Form 1099-MISC". It doesn't matter when you received the form -- it matters what year the form applies to. Also, a 1099-MISC indicates that someone gave money to you, which wouldn't be a "business expense" from your perspective, so I don't see how it would be deductible in any year. – Doug Deden Feb 22 '20 at 0:12
  • Note that although business expenses usually count in the year they are incurred, you can often contribute to self-employed retirement plans up until tax filing deadline. Some plans (like a Solo 401k) have to be set up in the calendar year but others (like a SEP IRA) do not. – Craig W Feb 22 '20 at 3:54
  • @DougDeden - a 1099-MISC indicates that someone gave money to you, which wouldn't be a "business expense" from your perspective_. That was verbal diarrhea on my part. The 1099-MISC just shows that I'm self employed. A few weeks ago I bought a new computer so that I might continue my self employment work. – neubert Feb 22 '20 at 4:26
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    Correction: 'if I haven't filed' is irrelevant. If otherwise eligible (have compensation, for deductible not employer plan and MAGI $64k/$103k or MFJ spouse $193k, for Roth not MAGI $137k/203k) you can contribute to IRA until the normal filing deadling, April 15 (or next business day). If you file early, you have until April 15 to contribute, and some people even use the refund from their return to do so, living a bit dangerously. If you get an extension and file late, you have until April 15 to contribute, not until filing. – dave_thompson_085 Feb 23 '20 at 6:14

Unless your company uses accrual basis then you recognize income and expenses when money changes hands. And unless your company has a non-calendar fiscal year you recognize income in the year it was earned/received depending on accounting method.

The vast majority of self-employed and small companies are on cash basis and use calendar year for their fiscal year. You'd know if that weren't the case for you, so if your 1099 is for 2019, you include that income on your 2019 tax return, and offset that income with business expenses you incurred in 2019.

The main benefit of the IRA contribution being allowed for prior year up to the tax deadline is that it gives you time to assess your tax situation before having to decide between Roth and traditional IRA.

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