Question about contract work

[LBAR18]

I completed a contract/independent job last year (2024) and submitted a W9 form to them. I was not paid for the work until January of this year (2025). Do I pay taxes on this income next year (2026), since it was technically paid in the 2025 calendar year? Or would I report this income this year on my 2024 taxes?

[CatinaT1]

It depends on if you use the accrual accounting method or the cash method of accounting. Most small businesses use the cash method, which means you account for income when it is received, rather than when it is earned (accrual).

Assuming you are accounting with the cash method, the income will be taxable in tax year 2025 when you file in 2026.

What is the accrual method of accounting? - TurboTax Support

[LBAR18]

Thank you! How would I go about finding out which method is used? The company I did the work for is not a small mom and pop business. It's a hospital/medical school in the area.

[CatinaT1]

This is something you decide. You will file this income on a Schedule C as self-employment.

You do not have to carry on regular full-time business activities to be considered self-employed. They will issue you a 1095-NEC next year. This is non-employee compensation. You were contracted to do a job, not employed to do a job.  You will need to file a Schedule C for Business Income and Expenses and pay Self-Employment tax on this income. When you are reporting this income, you will select that you use the cash method of accounting.