Business Phone Expense (Monthly Cycle) incurred in November/December 2015, but not paid until January 2016. Do I deduct the expense in 2015? Or, when paid (2016)?

Itemizing (Married Filing Separately)

SUMMARY:
Business Expenses (Mobile Phone (monthly))

DESCRIPTION:
I incurred the Jan. 2016 monthly bill for Nov./Dec.2015 cycle.

When calculating the 2015 overall mobile expense tied to business usage, would the Jan. 2016 monthly bill be included? Does it matter when this monthly payment was made (for example, if paid in 2016, or if paid in 2015)?

678

Expert Alumni

Jun 3, 2019 5:01:09 PM

Yes, it depends on the accounting method you use. Most taxpayers are cash method, meaning that the income and deductions are counted once received or paid. So only the expenses actually paid in 2015 would be included.

However, if you have elected the accrual method, then the income and deductions are reported when earned or incurred, so a payment in January 2016 for an expense incurred in 2015 would be allowed.

See the FAQ below for more info. https://ttlc.intuit.com/replies/3301956

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Business Phone Expense (Monthly Cycle) incurred in November/December 2015, but not paid until January 2016. Do I deduct the expense in 2015? Or, when paid (2016)?