Hey, I get paid out on my work usually 2-4 weeks after the fact. For example, my July profits are paid out to me by our corporate structure in middle to late August. How does one account for this when filing income taxes? For example, my December 2012 profits will be paid out no later than January 31, 2013. Are we required as individuals to report our income based on accounting or based on a cash basis? Do we have a choice? I'm trying to figure out if pay for December work that is paid out in January needs to be reported for 2012 or 2013.
Anybody have any idea? BTW, first person with a DEFINITIVE answer gets a silver banana... >:)
It's paid in the time frame in which you received it ie work you're compensated for in 2013 won't go on this years taxes even though it was earned this year.
cash basis - for instance, monkey gets bonus in january for work done in 2012 - goes on his 2013 taxes.
Definitive: it is cash basis to individuals. The IRS would be facing a total shitstorm if they let individuals have balance sheets.
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