Solved: For a New Years Eve contractor working until the morning, paid in cash on 01/01/18 with money taken out of the business account on 12/30/17 will the 1099 be for 17 or 18?
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For a New Years Eve contractor working until the morning, paid in cash on 01/01/18 with money taken out of the business account on 12/30/17 will the 1099 be for 17 or 18?

 
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For a New Years Eve contractor working until the morning, paid in cash on 01/01/18 with money taken out of the business account on 12/30/17 will the 1099 be for 17 or 18?

Individual taxpayers receive income and deduct expenses on the "cash basis."  This means you report income when you receive it and record expenses when you pay them.  

Since this transaction (paying the workers) actually took place the morning of January 1, 2018, it is a 2018 transaction.  When the money was drawn out of the bank to make the payments is not relevant to the determination.

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Level 2

For a New Years Eve contractor working until the morning, paid in cash on 01/01/18 with money taken out of the business account on 12/30/17 will the 1099 be for 17 or 18?

Individual taxpayers receive income and deduct expenses on the "cash basis."  This means you report income when you receive it and record expenses when you pay them.  

Since this transaction (paying the workers) actually took place the morning of January 1, 2018, it is a 2018 transaction.  When the money was drawn out of the bank to make the payments is not relevant to the determination.

View solution in original post

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