1099 Year End - Payment left our business account in December / Contractor received in January. Which year?

[goettemm]

Hi - I am a small business owner and pay a contractor monthly at the start of each month for services performed the prior.  The contractor is stating that a payment he received this past January 2nd is for 2025, but it left our account in December.  Which year should this fall under (I believe 2024)?

Best,

Mike

[ThomasM125]

It would depend on when the money was due and available to the contractor. You mention that you normally pay in the month after the services are rendered. If that is your agreement, then you paid it before it was due so it would not be deductible by you in 2024. Also, if you wrote the check but did not inform the contractor that is was available to be picked up by him or her, then it was not affectively paid in 2024 as the money was not available to the contractor.