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Managing Taxes on a Cash Basis

SLSSLS Member Posts: 2

I was sent payments for invoices, by check, in November and December. However, I have been out of the country since before they were sent to me, and will not be back till January, so I won't actually get the checks and be able to deposit them into my account until then. I operate my business on a cash accounting basis, so I'm assuming I'll just account for it as normal when I'm actually able to cash the checks. But I'm concerned it will cause a huge problem for my 2018 taxes as I expect the payers will show those amounts being paid in 2018 on my 1099. What should I do? Do I need to pay estimated taxes on them now even though I haven't received the funds yet?

in Accounting Technical Support

Comments

  • MikegMikeg Member Posts: 995 ✭✭✭

    You will probably need to include them in income. Even though you are cash basis, the IRS would deem the receipt of the payment (not cashed) as constructive receipt properly included in income for 2018. Please visit my website (www.mgfinancial.net) or contact me at mike@mgfinancial.net if I can assist with taxes. I have serviced clients in all 50 states. Merry Christmas

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