What tax year does my income get assigned to if my client sends the payment in December but I receive it in January?

Question

Suppose I did some contracting in December, my client puts a check in the mail in December, and I receive it and cash it in January.

Does my income count for December or January?

michael · Accepted Answer · 2016-12-14 14:25:27Z

8

Confused? see your CPA

answered Dec 14 '16 at 14:25

michael

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1

I accepted this answer, but then read this statement in the Stripe Atlas Guide: "In the cash method, your business records revenue as soon as it is “available to you without restriction.” This is a term-of-art from the IRS; a simplified view of it is “If your customer thinks they’ve paid you, you’ve probably booked revenue in the amount they think they paid you.” Revenue which has hit one of your accounts is certainly revenue as of that instant; checks which have been sent to you are revenue as of when they are sent rather than when they are received.
– Doug Bradshaw
Dec 15 '16 at 16:45
2

Yes I see.....from IRS Pub #538: ....On December 30, 2014, Mrs. Sycamore sent you a check for interior decorating services you provided to her. You received the check on January 2, 2015. You must include the amount of the check in income for 2015. Constructive receipt. You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it.
– michael
Dec 16 '16 at 20:37
1

@michael if you've changed your mind on this answer (as it seems that you have from your comment), you should edit your answer.
– Ben Miller - Remember Monica
Mar 6 '17 at 15:08

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